Specialists to gain from professional indemnity growth
Specialist insurers and brokers with deep roots in the professional indemnity business are poised to capitalise on a forecast rapid growth in this market over the next four years.
According to new research by Finaccord, a market research consultancy, the market for professional indemnity insurance across ten European countries will be worth around €7.5 billion by 2017. The countries are: Austria, Belgium, France, Germany, Italy, Netherlands, Poland, Spain, Switzerland and the UK.
The research showed that gross written premiums for this form of insurance amounted to around €6.78 billion across the ten countries in 2013, having grown from approximately €6.15 billion in 2009. The UK is estimated to have the largest market, followed by Germany and France.
Moreover, gross written premiums grew between 2009 and 2013 in all countries other than Spain.
But the sector remains fragmented, offering opportunities for insurers and brokers with specialist skills. In terms of their revenues, Aon and Marsh are by far the largest commercial non-life insurance brokers in Europe and the research indicates that they are also the leading brokers of affinity programmes, set up by professional associations, for professional indemnity insurance in Europe.
However, their overall share of these partnerships is relatively low at 10.6 percent in the case of Aon (including its UNITA subsidiary in Germany) and 4.5 percent for Marsh. Many affinity schemes are accounted for primarily by brokers with a focus on just one national market.
“The generally fragmented picture among insurance providers confirms the specialised nature of professional indemnity insurance,” said Bernd Bergmann, a consultant at Finaccord. “By necessity, many commercial insurance brokers are specialists and professional associations are most likely choose brokers with a detailed understanding of the particular risks faced by their members to run their affinity schemes.”
It is also a mixed picture in terms of pricing in this sector. While the pricing of professional indemnity policies has been soft for several categories, including, for example, accountancy and finance and legal services in most countries, other segments have seen rapid growth in premiums. The cost of negligence claims for medical specialists has been rising at an especially rapid rate in recent years making medicine and dentistry (including hospitals) the fastest growing professional indemnity insurance market in Europe between 2009 and 2013, the report notes.
Finaccord’s new report also predicts how the market will develop across 12 distinct professional categories. It anticipates growth across all 12 sectors ranging from a low of 0.6 percent as a compound annual growth rate in the case of the broadcasting and publishing segment to a high of 4.3 percent in the fields of both alternative medicine and IT and business consulting.
“Growth in professional indemnity cover for some segments is highly correlated with trends in the underlying number of insurable enterprises,” said Bergmann. “While there are good reasons to insure the liability risks of media professionals, this market is currently held back by the stagnation or actual decline of the publishing sector. Given strong increases in the number of insurable enterprises for both alternative medicine and IT and business consulting, growth for the professional indemnity insurance market is expected to be especially strong for these two segments.”
