It’s a difficult time for brokers up and down the country. On almost every Professional Indemnity renewal we need to explain to clients why premiums are on the rise; but why, and what can you do?
So, what are the implications of a hard insurance market for your business?
For some brokers, they probably haven’t seen a hard insurance market and don’t even understand what it is. For someone who has been in the game as long as I have, I can tell you it’s never good and could cause big problems for clients and brokers alike.
In the BIBA 2020 Manifesto, it talks of “the severe shortage of professional indemnity insurance”. Unfortunately, I can see many businesses (especially in the construction industry) going under due to the lack of cover available.
Due to reasons such as the Ogden rating, the tragic events of Grenfell and rising claim costs the PI market has finally opened its eyes and realised premiums have been exceptionally low for 20+ years. Unfortunately for clients, premiums have increased faster than expected.
For the first time since the early 2000s premiums are going up - and going up fast. Many insurance companies have withdrawn from the PI market altogether, leaving the ones that are still prepared to write business to increase their rates by up to 600% year on year.
I’ve been shocked and sickened by how high the increases have been in such a short period of time. I expected this to be done in stages, but unfortunately, this hasn’t been the case. As a broker, at times our hands are tied by the market; it’s extremely frustrating when we always do our utmost for our clients.
So, what does this mean for you?
- Significant rises in premiums. We’ve heard of examples from other brokers where premiums have risen by as much as 600%, in some cases.
- Insurers are increasingly diligent in assessing risk and adding exclusions that clients have never had before.
- Higher excesses and limitations of cover.
- Insurers only insuring part of the liability, with excess layers needed to be added
What can you do to secure the best possible terms?
- Make early contact with your insurance broker before renewal, so you can submit your renewal proposal form comprehensively and in good time.
- Be open and honest with your broker; discuss different options such as excess layers or reducing cover.
- Ask your broker for regular updates and have weekly catchup calls with them.
- But, most importantly be aware of the increases, please don’t hope it won’t affect you. Prepare for the worse and hope for the best.
Please don’t hesitate to contact us on 0161 929 2626 or firstname.lastname@example.org if you have any questions or queries.