Surveyors: PII Market update: October 2023

As we approached the end of 2022, there was a feeling of increasingly benign conditions in the Professional indemnity insurance (PII) market, which many thought to be the beginning of a positive transition from the market difficulties experienced over recent years.

Armed with this optimism, I was thrilled to have the opportunity to speak at an industry conference in October 2022, however this was slightly dampened by the announcement of the mini-budget just a couple of weeks beforehand.

High on the agenda was the increased costs of living, along with rising energy prices, inflation and its relationship with upward pressure on interest rates. As a result, the key message from me, at the time, was that much will depend on how the various ‘uncertainties’ play out going into 2023 and the ability to maintain confidence among insurers in the PII market.

Since then, we have seen significant improvements in the PII market.

The Lloyd’s Performance Review is complete, with premium rates now deemed to be at  levels that will sustain the market (which was the premise of the review back in October 2018) and with a focus transitioning back to growth. Lloyd’s have approved growth plans for a large number of its syndicates, with 20% more capacity deployed into the insurance market from January this year¹.

A year on from the mini-budget and despite not yet being ‘out the woods’, the UK property market has appeared to withstand certain head-winds. On the face of it, the Property market has maintained stability, therefore easing underwriters concerns about the implications of higher interest rates and its resultant impact on the claims environment.

Generally speaking, insurers are showing more willingness to underwrite certain risk profiles which they may not have entertained previously. This renewed appetite along with the focus around growth, supported by the additional capacity has brought new competition. This is something any marketplace needs in order to drive improved outcomes for our clients.

Approaching renewal and looking ahead

For PII purchasers, the fundamentals remain relevant irrespective of market conditions. They should have a clear and mutually agreed renewal strategy based on objectives and set timescales for their broker throughout the renewal process.

At the time of writing, there is much to be positive about as we reflect on the improvements we have achieved for our own clients’ policies and PII programmes. The premium you pay as a percentage of turnover should be going in a downward direction, where you should now be paying away less premium as a share of every pound of income you earn.

As the market continues to improve, PII purchasers should maintain the amount of time they invest into the renewal process and the engagement they have with their broker and/or insurer.  A broker’s ability to present your risk profile to the market effectively, will continue to be of fundamental importance to the renewal outcome.

New Property Professionals PII Facility

Howden recently launched the ‘Property Professionals PII Facility’ which aims to address the aforementioned issues and is supported by several RICS listed Insurers with the capability of writing up to a £10,000,000 primary limit of indemnity.

The support of these insurers aim to maintain longer term insurer participation, reducing the likelihood of emergency replacement of insurer participation in the event of any future market volatility.

Callum English of CNA Hardy comments...

Howden has a depth of experience providing PII broking services to the surveying, valuation and land professions across residential & commercial property, as well as construction based activities. The size of our client base in this field, enhances our ability to reliably challenge existing arrangements and look to improve terms. 

1. https://www.slipcase.com/view/insurer-in-full-lloyd-s-2023-stamp-capacity-up-21-as-majority-of-syndicates-approved-to-grow