UK PI has not been a profitable line of business for insurers for many years, although some sectors within it perform better than others. The focus of attention (and corrective measures) has largely been in the Construction field.
The trend for the changing market began with the tragic events at Grenfell. Cladding contractors (and associated professions such as architects and project managers) suddenly faced huge increases in premiums; higher excesses and narrower cover.
Risks which insurers thought were contingent (because the design element of the risk was subcontracted out) – and thus paid at very nominal rates – proved not to be the case as subcontractors’ own PI did not respond in the way expected; due to non-existence; non-renewal; ceased trading or inadequate Limits and/or cover.
Claimants also used a “scattergun” approach against all the parties in the construction chain on the basis that one or more of the PI policies would respond, regardless of the individual Firm’s role and responsibility.
But the seismic change in the UK PI market came in the Summer of 2018. Following years of losses, syndicates and insurers finally woke up to the fact that unless they could turn around their fortunes and write a profitable PI book, they could not continue as they had done before. Consequently, a number of markets withdrew from the sector, leaving those still remaining to take advantage of the much-reduced capacity, with higher prices and reduced cover, followed by some MGA’s losing their capacity providers.
A more disciplined underwriting approach also ensued, with subscription lines becoming the norm, together with a closer examination of an Insured’s risk management procedures.
For many account handlers, more used to PI premiums reducing every year, it came as a culture shock to suddenly be asked to sell a higher premium and harsher terms and conditions generally. Brokers learned very quickly that telling their construction clients that they had had it cheap for years did not really cut much ice in an industry with operates on notoriously thin margins.
Of course, some of us have been here before. We have seen hard markets and soft markets.
So how can Miles Smith help you? Our PI team has decades of experience and knows how to trade through the market cycles. We are fortunate to have our own in-house facilities where we can provide quick solutions for Policy Limits up to £10m for around 70% of all enquiries received. And for those risks which are not suitable for our Facilities, we have full access to the Lloyd’s and London markets to assist with the more difficult to place risk. Miles Smith will is here to help; whether it is a simple risk or a more challenging risk – we will help you find the best solution during these difficult times.
Miles Smith’s professional indemnity team can provide cover for almost all classes of profession (other than solicitors and financial advisers). For more information on how we can help you place PI business, please click here.