After another challenging year, the construction and property professional indemnity insurance markets are beginning to show indications of stabilisation.
For all of us, it’s been a difficult three years.
Three years of an exceedingly difficult “hard” Professional indemnity insurance (PII) market have harmed firms in several sectors. Unfortunately, this comes at a time when businesses are dealing with the COVID pandemic, which is likely their greatest problem to date.
A number of insurers have totally abandoned the market in recent years, resulting in this difficult environment. Meanwhile, the surviving insurers were attempting to repair their books of business in order to continue dealing. As a result, most insurers have little desire to pursue new business opportunities. They were instead focus on getting their current home in order. This, combined with the lack of large new entrants aggressively pursuing new business possibilities, forced brokers to negotiate the best terms with a firm’s incumbent insurer in the majority of cases (if they were still operating and offering renewal terms).
The current market situation
Thankfully, market stability and confidence appear to be returning, as most businesses look to be “bouncing back” financially, which is a healthy sign. We are far from out of the woods, and I believe it will be some time before the PII market can be described as “soft” again. Insurers, on the other hand, are making some positive comments right now.
Most insurers appear to be satisfy with the level of coverage they can provide, despite many having reduced it in previous years’ renewals. And, while some insurers continue to seek for rate hikes, they are nowhere near the levels seen in prior years.
Much has been written on the more stringent policy terms and conditions that come with a “hard” market. Imposing policy constraints on basements, swimming pools, the employment of subcontractors/consultants, fire safety/cladding/EWS1, and cyber-related concerns, to name a few.
Due to the high volume of claims in this area, PII plans are now expressly stating that they will not cover any cyber insurance-related concerns, which are better cover by a specialise standalone cyber liability insurance policy.
The fire safety/cladding requirements that businesses in this industry face are a paper in and of themselves. The Royal Institution of Chartered Surveyors (RICS) has attempted to provide some security for its members by requiring insurers to provide £1 million in aggregate cover for properties up to four storeys in height as part of their minimum terms. Aside from the RICS position, the majority of the market still has extensive exclusion clauses in its policies.
Some insurers are talking about providing limited coverage, mainly for future projects, but are cautious for older ones. The government’s present financing to help property leaseholders is encouraging1, but funding it through developers/other stakeholders does not solve insurers’ long-standing concerns.
How can you get PII premiums that are competitive?
Insurers are noticing rating stability and a desire to actively pursue new business. To attract insurers and get cheap premiums, businesses must provide a complete risk profile. This can only be accomplish by following the well-establish practise of collaborating with a professional PII insurance broker.
Start chatting to your broker as soon as possible, well before your renewal deadline, to maximise your PII programme (two-three months). Working together, you may create a complete presentation with risk management provisions and access to all necessary insurers.
Browse more interesting articles at Beta Posting
