New research by market research consultancy London-based Finaccord forecasts that the market for professional indemnity insurance across ten European countries – namely, Austria, Belgium, France, Germany, Italy, Netherlands, Poland, Spain, Switzerland and the UK – will be worth around €7.5 billion [$10.33 billion] by 2017.
Finaccord said it has “calculated that gross written premiums for this form of insurance amounted to around €6.78 billion [$9.339 billion] across the ten countries in 2013, having grown from approximately €6.15 billion [$8.47 billion] in 2009. The UK is estimated to have the largest market, followed by Germany and France. Moreover, gross written premiums grew between 2009 and 2013 in all countries other than Spain.”
Bernd Bergmann, a consultant at Finaccord, said: “While the pricing of professional indemnity policies has been soft for several categories, including, for example, accountancy and finance and legal services in most countries, other segments have seen rapid growth in premiums.
“The cost of negligence claims for medical specialists has been rising at an especially rapid rate in recent years making medicine and dentistry (including hospitals) the fastest growing professional indemnity insurance market in Europe between 2009 and 2013. In addition, the cover is being made compulsory for an increasing number of professionals. The most notable example of this trend is Italy where professional indemnity insurance is now being made obligatory for some important professional categories, including architects and engineers.”
The study points out that “one of the main means by which enterprises acquire professional indemnity cover is via affinity schemes set up by professional associations. As a part of its research, Finaccord surveyed 1,125 associations across Europe and found that 464 (41.2 percent) had established such a scheme. The countries in which such schemes are most commonly in evidence are the UK (with a provision rate among professional associations of 62.7 percent), Germany and Italy (50 percent each) while they are least widespread in Poland (19 percent), Spain (32.2 percent) and the Netherlands (32.7 percent).”
In terms of their revenues, Aon and Marsh are by far the largest commercial non-life insurance brokers in Europe. Finaccord said its “research indicates that they are also the leading brokers of affinity programs for professional indemnity insurance in Europe in terms of their number of partnerships with professional associations.
“However, their overall share of these partnerships is relatively low at 10.6 percent in the case of Aon (including its UNITA subsidiary in Germany) and 4.5 percent for Marsh. Thereafter, affinity schemes are accounted for primarily by brokers with a focus on just one national market.”
Bergmann added: “The generally fragmented picture among insurance providers confirms the specialized nature of professional indemnity insurance. By necessity, many commercial insurance brokers are specialists and professional associations are most likely choose brokers with a detailed understanding of the particular risks faced by their members to run their affinity scheme.”
Finaccord’s new report also examines how the market will develop across 12 distinct professional categories, which it identified as: “accountancy and finance; alternative medicine; architecture and engineering; broadcasting and publishing; estate agency and property; financial and insurance intermediation; healthcare-related services; IT and business consulting; legal services; marketing; medicine and dentistry; and other professional sectors.”
Specifically, Finaccord said it “anticipates growth across all 12 sectors ranging from a low of 0.6 percent as a compound annual growth rate in the case of the broadcasting and publishing segment to a high of 4.3 percent in the fields of both alternative medicine and IT and business consulting.”
Bergmann concluded: “Growth in professional indemnity cover for some segments is highly correlated with trends in the underlying number of insurable enterprises. While there are good reasons to insure the liability risks of media professionals, this market is currently held back by the stagnation or actual decline of the publishing sector.
“Given strong increases in the number of insurable enterprises for both alternative medicine and IT and business consulting, growth for the professional indemnity insurance market is expected to be especially strong for these two segments.”