Afternoon, I hope you are well and enjoying the very closest we now can be back to normality! I hope all of you are also enjoying the Euros and looking forward to the boys bringing it home tonight?
So Professional Indemnity, a lot of people ask us, Where are we at? How is the market? Should we be worried about upcoming renewals? Is the market starting to calm down? Why are we seeing increases still? When will things change?
The honest answer to all of the above, is.... we are still in a very challenging period of what should be referred to as a 'Hardening market' and not a 'Hard market'. We probably are going to be for another 12-18 months while insurers fight to recoup their lost income following some extremely large losses, some are still surfacing now.
I personally can't say I was around to experience the last hard market but from speaking with a number of people in the market, we are nowhere near in as bad position as Insureds found themselves then.
Premiums have increased by large margins, particularly in the most effected sectors such as Construction, Engineering, Architects and Accountants with tax exposure, even those who may now just be considered to have a legacy exposure rather than current exposure. But the key difference between the current 'Hardening market' and last 'Hard market' is, insurance in most cases is still available, yes it is at onerous premiums with restrictive coverages but it is still there to be purchased which is why this market should be referred to as 'Hardening'.
Is it going to be as bad as before? In my opinion probably not as new capacity is entering the market, admittedly in small doses and only to a few sectors but in terms of markets leaving, I can't see that happening yet with anyone else, what we will find is the current curve the market is hardening at will creep up at a slow pace or if not maintain where it is for while, before it softens or gets better.
What should you expect?
So the purpose of this article really was to give my opinion to my brokers of the market and I guess some 'Pointers' based on my current experience, What to expect?
- We probably have seen already by now the 'big scares' on most renewals, we may seen some insurers reduce line sizes from 5mils to 2mils but most have probably done this by now. Potentially switching AOC to agg on some D&C business.
- If the risk is still carrying a crazily competitive rate, then depending on who that insurer is, it may go up, if the risk has run well and their is a justifiable reason, the chance is your probably going to be ok.
- As mentioned most of the crazy increases have happened by now, unless a risk was placed with one of a few insurers who are in run off/have left the market on binders but you should probably expect circa 15-25% increasing on renewals and be warning your client of this.
- You are probably going to see higher retentions if your insureds excess is less than GBP 2500.
- Expect to see limitations/exclusions applied in respect of basements, cladding, pools and a pandemic/communicable disease exclusion and Cyber Data Protection clause on every renewal. In addition to the above you may see Manufacturing and Transit clauses applied.
- Please ensure your client continues to present themselves well to the market with a thorough presentation, this really does help
What you can do to be prepared?
A little take away point from me on how to handle the above 6 points? Choose the RIGHT Lloyd's broker! If your Lloyd's broker isn't hand holding you through the above points and alarming you of issues to expect, then you are working with the wrong wholesaler!
You approach a Lloyd's broker as they are a specialist in their field, right? So if they aren't sharing their knowledge of the market with you, making you feel at ease and removing your anxieties - then ask yourself, are you satisfied with this?
At Servca one of our main USP's, behind our placement strategy, is to be honest... quite an easy and simple one, but we know how effective it is. Customer service is at the forefront of what we doing and providing a happy, professional, knowledgeable and personal journey for our brokers. I know this is one thing we won't be beaten on, so pick up the phone to me today and let us show you, your worth.
Your clients shop around every year or two to see what's out there, so don't be afraid to do the same with your Lloyd's broker.