A new study from financial market research consultants Finaccord forecasts that the market for professional indemnity insurance across ten European countries – Belgium, France, Germany, Italy, Netherlands, Poland, Spain, Sweden, Switzerland and the UK – will be worth around €7 billion [$9.98 billion] by 2014.
Finaccord said its analysts calculated that that “gross written premiums for this form of insurance amounted to around €5.81 billion [$8.285 billion] across the ten countries in 2010, having grown from approximately €5.17 billion [$7.372 billion] in 2006. Moreover, gross written premiums grew between 2006 and 2010 in all countries, other than the UK, which accounted for around €1.59 billion [$2.267 billion] of the total for 2010.”
Finaccord Director Alan Leach noted: “Across the ten countries, there are over 6 million enterprises potentially eligible for professional indemnity insurance. For some, holding professional indemnity cover is compulsory in order to exercise their profession while for others, it is optional.
“However, increasing take-up rates among those for which it is often not obligatory will be one of the drivers of the market in future, notably in the IT, management and financial consulting sector, which is the largest segment with 1.45 million insurable enterprises.”
Finaccord’s study also noted the high percentage of professional indemnity coverage acquired through “affinity schemes set up by professional associations.” The survey of more than 1,100 associations across Europe found that “430 (39 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 57 percent), Germany (52 percent) and Italy (48 percent) while they are least widespread in Poland (18 percent), Spain (27 percent) and the Netherlands (27 percent).”
The study also, not unsurprisingly, found that “Aon and Marsh are by far the largest commercial non-life insurance brokers in Europe” measured by gross revenues. “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 low at 7.9 percent (34) in the case of Aon (including its UNITA subsidiary in Germany) and 3.7 percent (16) for Marsh. Thereafter, affinity schemes are accounted for primarily by brokers with a focus on just one national market.”
Leach added: “In the light of the specialized nature of the activity, the generally fragmented picture is, perhaps, unsurprising. 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 schemes.”
Finaccord’s study also predicts how the market will develop across ten distinct professional categories, which it specified as follows: “accountancy and finance; architecture and engineering; broadcasting and publishing; complementary medicine; estate agency and property; IT, management and financial consulting; legal services; marketing; medicine, dentistry and other healthcare activities; and other professional sectors.”
It forecasts growth across all ten sectors “ranging from a low of 2.9 percent as an annual average in the case of the accountancy and finance segment to a high of 6 percent in the field of medicine, dentistry and other healthcare activities.”
In conclusion Leach stated: “The cost of medical negligence claims is rising more rapidly than the cost of claims for most other types of professional error across Europe, and this is the main reason for the high growth rate forecast for the sector of medicine, dentistry and other healthcare activities. This difference underlines how professional indemnity insurance in Europe is a complex set of markets rather than a single one, with issues specific to each country, such as insurance pools in the Netherlands or the growing number of solicitors unable to buy cover in the UK, or to professional categories, such as single project insurance in the architecture and engineering segment.”
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