Global law firm Clyde & Co says confidence is high and appetite strong in the London professional indemnity (PI) market, despite a trinity of challenges facing the industry.
95% of insurers expect a greater number of claims in the next two years with 67% expecting them to be more severe.
Meanwhile, recession, cyber threat from remote working and continued regulatory oversight are top of the industry’s list of concerns.
Clyde & Co’s Global Professional Liability team surveyed 122 London market insurance professionals including broking, underwriting, claims as well as buyers for their take on developments in the PI market and buyers in May this year.
“These findings are both surprising and gratifying for the insurance market,” said Simon Konsta, Partner, Clyde & Co.
“That appetite is strong despite the challenges being faced should give the market a lot to think about as it confronts renewal season.
“Neither buyers nor carriers have any doubt that claims are set to rise, but there is broad agreement that London is well placed and has the appropriate capacity, competitive rates and robust claims functions to preserve its position as a preeminent international hub for PI risks.”
Elsewhere, 68% of insurers see an increased threat associated with weakened supervision and 58% expect greater privacy, cyber and ransomware exposures associated with COVID-19.
100% of buyers surveyed and 99% of insurers expect rates to rise this year, and further hardening is expected but only in the medium term.
75% of insurers think prices will continue to increase through 2022 but only 6% expect hardening beyond that.
However, a third of insurers expect rate rises this year over 10%, and two-thirds think they will top out above 15%.
Ultimately Clyde & Co says buyers are seeing changes in the terms of their PI cover with 35% reporting higher deductibles and 29% a reduction in coverage.
The firm also underlines how 12% of the market has not addressed wordings in the last five-plus years, with 14% simply unable to remember when they last revisited wordings.