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United Kingdom (UK) Professional Indemnity Insurance Market Analysis and Forecast, 2021-2025

After several years of significant premium rate rises in the UK professional indemnity insurance (PII) market, increases appear to be stabilizing. However, market conditions are very profession-specific and are also cut by size of risk. Professional indemnity underwriters are traversing the economic uncertainties and impacts of the COVID-19 pandemic, which could have a significant impact on the future course of the market. While claims are emerging, there will be a lag before the true impact of the pandemic is known, and claims inflation and severity are both predicted to continue rising over the next few years. There are signs of capacity returning to the market, but insurer growth will be cautious. Market growth is therefore forecast to stabilize until 2025.

This report provides in-depth analysis of the UK professional indemnity insurance market. It looks at market size as well as changes in premiums, claims, distribution, regulation, and future opportunities, including our proprietary GWP forecasts and the impact of COVID-19. The report uses results from our annual UK SME Insurance and UK Commercial Insurance Brokers Surveys, as well as additional in-depth interviews with industry leaders.

Scope

– We estimate the UK PII market to be worth £2.9 billion in 2021, with growth driven by premium rate rises across most market sectors. While premium adjustments will continue during 2022, it is expected that by the end of the year flatter rates will return.

– PII penetration rates have fallen among micro enterprises and those not providing professional advice, as coronavirus pressures mean SMEs are re-evaluating their insurance holdings.

– Professional indemnity insurers are already dealing with coronavirus-linked claims. While 5.9% of SMEs have made a successful claim on their PII policy as a result of the COVID-19 pandemic, the figures suggest that currently around four in 10 claims are being rejected.

– AXA is the SME market leader with a 10.0% market share, while Hiscox and Tokio Marine HCC are the most favored insurers among brokers for PII placement.

Reasons to Buy

– Understand the current and forecast size and growth of the UK professional indemnity insurance market, along with sector-specific drivers

– Gain insight into how the pandemic has impacted claims and product uptake

– See what impact the hard market has had on SME switching and renewal behaviors

– Benefit from GlobalData’s UK SME Insurance and UK Commercial Insurance Broker Surveys, along with in-depth interviews with industry participants

– Get access to professional indemnity insurer SME market shares and understand broker preferences

– Understand professional indemnity insurance distribution trends

Key Players

AXA

Hiscox

Tokio Marine

Gallagher

Lloyd’s of London

Aviva

Zurich

Allianz

Markel

Axiom

Obelisk

The Ardonagh Group

Willis Towers Watson

Table of Contents

Table of Contents

1. Executive Summary

1.1 Market overview

1.2 Key findings

1.3 Critical success factors

2. Market Dynamics

2.1 Traditional professions account for 75-80% of GWP

2.2 Strong PII market growth continued in 2021

2.3 Sector-specific forces are impacting different professions

2.4 COVID-19 is impacting the PII risk landscape

2.5 COVID-19 has impacted PII penetration in some SME sectors

3. Competitive Landscape

3.1 Capacity withdrawals have impacted the competitive landscape

3.2 AXA and Hiscox remain the market leaders for SME PII

3.3 Hiscox and Tokio Marine HCC are the most favored insurers for PII placement among brokers

4. Product Distribution

4.1 SME buying habits have been largely unaffected by the hard market

4.2 Switching has fallen and is driven by cost and cover levels

5. Future of the Market

5.1 UK PII market growth will slow to 2025

5.2 Economic uncertainties could have significant implications for the PII market

6. Appendix

6.1 Abbreviations and acronyms

6.2 Definitions

6.3 Methodology

6.4 Secondary sources

6.5 Further reading

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List of Tables

List of Tables

Table 1: COVID-19 related concerns for PII insurers

Table 2: Impact of COVID-19 on the PII policyholding considerations of SMEs

Table 3: UK PII SME market shares by sector, 2021

Table 4: Method most recently used by SMEs to purchase PII by size of SME, 2021

Table 5: PII switching levels and behavior at last renewal by size of SME, 2021

Table 6: UK PII GWP, 2017-25f

Table 7: Economic and regulatory indicators that will impact the future of the PII market

List of Figures

List of Figures

Figure 1: UK PII GWP has grown significantly over the hard market

Figure 2: 5.9% of SMEs have made a successful PII claim as a result of the COVID-19 pandemic

Figure 3: PII penetration levels have shown signs of decline, particularly among micro enterprises and those not providing advice

Figure 4: SMEs have reconsidered PII as a result of the COVID-19 pandemic

Figure 5: Two thirds of SMEs that canceled PII due to COVID-19 needed to cut costs or were unhappy with the expected level of cover

Figure 6: AXA is the UK PII SME market leader, with a greater share among small and medium companies

Figure 7: Hiscox and Tokio Marine HCC lead the way for PII among commercial brokers

Figure 8: Brokers are the main channel used by SMEs to purchase PII

Figure 9: The internet is used by the majority of SMEs for PII

Figure 10: While shopping around has increased, switching has fallen among SMEs with PII

Figure 11: The level of cover and specialist expertise are increasingly important drivers of switching among SMEs

Figure 12: UK PII GWP growth will stabilize after 2022

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