Great Britain
Looking back at 2024, London market PII rates saw a notable decrease of circa 5-10%, partly due to a correction of the large rate increases that firms experienced in the 2019-2022 hard market.
In 2024, the London market for professional indemnity saw new capacity entering, which led to existing insurers expanding their risk appetites. This created competitive tension, helping to reduce rates — a trend we expect to continue into 2025.
Competitive market dynamics
A competitive landscape enables brokers to negotiate enhanced terms on behalf of insured clients, expanding the breadth of coverage—a positive trend we expect to continue. Brokers should take the opportunity to advocate for their own policy wordings and carefully review coverage options as the market softens. A recent example includes underwriters agreeing to round-the-clock reinstatement at no additional premium for a client operating in a notoriously challenging sector for placing PI risks.
Increased capacity in the market has helped reduce clients' premiums and allowed for higher limits of indemnity to be purchased compared to previous years. From a macro perspective, reinsurance rates remain consistent and are not expected to constrain the PII market in the coming 12 months. Moving forward, we anticipate that the PII market in London will remain highly competitive, with insurers aggressively competing for market share.
Technological advancements dynamics
Insurance broking is increasingly driven by high-quality data. WTW is at the forefront of this shift, proactively leveraging advanced data analytics and cutting-edge technology to design insurance strategies that align with your unique risk profile. By utilising proprietary data, WTW creates tailored, bespoke risk management solutions that precisely address individual client needs. Over the past decade, financial institutions could have mitigated up to 21% more in losses had their insurance limits been more closely aligned with their specific risk profiles.
At the same time, insurers are adopting new technologies and data analytics tools, enabling them to assess risks with greater precision and efficiency. These advancements allow for more accurate underwriting and the ability to offer customised solutions. As a result, there is now an increased emphasis on achieving favourable outcomes for well-managed risks. Insureds can present their risks on their own merits, leading to more accurate ratings that reflect the true nature of the risks involved.
Claims experience
The below chart provides a review of PI losses in Professional services for PII over the last 5 years. As one might expect the main two causes of PI claims are Improper business practices and advisory activities, a trend we expect to continue. Advisory activities are significantly the most frequent loss. Although their values are less than other types of claims, improper business practices display a high level of frequency and are also more severe in nature. Drilling down further into the data to develop risk mitigation strategies is a key line of defense for the Insured’s risk management.
Proactive risk management is a key aspect Underwriters look for when selecting risks. WTW provides various options to help enhance firms' risk management, including a Risk management team, legal professionals in their claims team, and utilising their data to discover claims trends in your industry.
We anticipate the market correction to continue into 2025, PII buyers in London can benefit from competitive pricing, broader coverage options, and a bespoke approach to risk. It is essential for businesses to stay informed on developments and work closely with their insurance brokers to capitalise on market trends and secure comprehensive PII coverage built around their needs.
