Survey respondents predict PI insurance will jump 10%
Survey respondents predict PI insurance will lead the charge in compliance price rises, followed by employment practices liability insurance.
Management liability and professional lines pricing will increase in 2013, with the main driver being professional indemnity insurance, survey results have shown.
A recent survey undertaken by global specialty insurer Torus highlighted that there is growing concern over the escalating costs of compliance.
Specifically, 67 per cent of 105 insurance respondents predict increases in management liability and professional lines insurance of up to 10 per cent. Around 19 per cent indicated that they expect to see prices increase by more than 11 per cent compared to 2012 pricing.
When asked what segments will drive price increases, 32 per cent selected professional indemnity insurance, followed by employment practices liability insurance (31 per cent), directors and officers liability insurance (22 per cent), and fiduciary (5 per cent).
This follows what Jeffrey Grange, senior vice president and head of professional lines at Torus, previously told FTAdviser. In an interview, he said the insurance market is currently in a transition and “prices are clearly moving up and the pace of that will accelerate in 2013”.
Mr Grange previously said: “What is unique is that I think the capacity or availability of coverage will be more restrained. There is a fear factor for underwriters underwriting financial institutions, whether that be IFAs, or Fleet Street banks which is very high.”
Indeed Carl Lamb, managing director of IFA firm Almary Green, previously told FTAdviser that the firm has seen its PII premiums double, partly due to there being so few PI insurers in the market.
Openwork also previously told FTAdviser that its PII premiums have jumped by 30 per cent this year compared to last year. Although this is partly attributed to less PI insurers in the market, Openwork said this was driven by a rising number of “frivolous” claims coming from claims management companies.
In April 2012, insurance underwriter Chubb told FTAdviser that it was withdrawing from the surveyors and valuers and IFA PI lines of business after concluding that the adviser market was no longer profitable.
In July last year, PI insurer Beazley pulled out of the IFA market due to increasing claims and QBE followed in December, saying the market was no longer profitable.
Mr Grange highlighted that last year was a year of “widespread concern” over pricing uncertainty and today, the overwhelming consensus is an anticipation of rate increases in 2013.
He said: “This environment will present many challenges to producers as they manage expectations while advising their clients, whether working with small and medium sized enterprises or large, complex publicly traded institutions.”