ntegrity insurance solutions limited

SURVEYORS

OUTLOOK FOR PII PREMIUMS AND CLAIMS

April 2010

 

We surveyed specialist PI insurers for surveyors in December 2009 and the results do not make encouraging reading for Surveyors in 2010.

The survey found that 50% of those who responded expect premium rates for surveyors to rise by more than 10%, with 40%expecting rate increase of up to 10% and no one offering hope of reductions. Only 10% expect rates to remain as in 2009.

When asked about expected new claims activity, 64% expect the number of new claims to increase a little on 2009 and 18% expect a substantial increase. The cost of claims is expected to rise with 64% anticipating that costs will be higher than in 2009.

This picture will be a concern to surveyors already challenged by the property market and business climate. It is important to remember that while rates may change, the premium actually charged also depends on the fee income of the firm and its own unique characteristics and claims record. If a firm’s fee income has fallen by 10% and rates are unchanged from last year, then the practice might reasonably expect a corresponding reduction in premium, Increasingly, however, underwriters increasingly argue for retaining the same premium on grounds that the ‘claims made’ policy covers all historic work including that from better times past.

Annual research into the UK Professional Indemnity insurance market by Datamonitor reports that in 2008 the combined ratio across all insurers (the ratio of claims paid and outstanding compared to premium, with no provision for broker commission or insurer expenses) was 90.6% and had risen from 70.1% in 2007. This is an enormous shift in a year and with typical expense ratios across the market in the mid 20’s% to be factored in the market moved firmly into loss territory. 2009 and 2010 are unlikely to improve and pressure will build for a correction.

E Mail surveyors@ntegrity.co.uk

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