The professional indemnity (PI) market in New Zealand is relatively stable with most industry sectors experiencing a mid-level single digit increase in premiums for renewals based on fee income remaining static and a clean claims record, says Willis Towers Watson (WTW) in its New Zealand Insurance Market Update.
Industry sectors demonstrating higher levels of premium increase are consulting engineers, construction contractors, real estate agents, solicitors and valuers. Clients in these sectors with poor claims records are facing increased scrutiny by insurers in relation to cover, premium rates and excesses.
One market has recently withdrawn from the PI arena citing increased claims experienced over a sustained period, mainly in the Australian market, and therefore deciding to exit the New Zealand market on the expectation that this poor claims experience will follow in New Zealand.
A considerable amount of capacity still remains available with 10 markets writing PI, and as well as a new entrant entering the SME PI space.
Insurers in London, though, have experienced worsening claims in international PI and are remediating their portfolios with increases in premium and a reduction of capacity available. Lloyd’s, in particular, has undertaken remedial action, including the ‘Decile 10’ thematic review requiring the syndicates to identify the worst-performing 10% of their business, closing poorly-performing syndicates and providing robust and resilient business plans in order to protect Lloyd’s world-leading security rating
This remedial action has had a particular impact on PI with certain syndicates no longer able to write it.
WTW sees insurers continuing to being more discerning in risk selection, with non-performing industry groups or professions continuing to be re-rated. Increases in premium can be expected, including as a starting point, linear increases in line with revenue increases. In addition, coverage and excesses will be reviewed. A