TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Executive Summary 2
The professional indemnity market fell in 2009 due to lower turnover and premium rates 2
Profit margins in the professional indemnity market have been squeezed due to elevated claim costs 2
In the solicitors market, premium rates are being pushed up by the assigned risk pool 3
Insurers covering the surveyors market are experiencing a rise in lending valuation exposure 3
The market remains highly competitive, as the differential in market shares between the top ten players remains low 4
Table of Figures 7
Market Context 9
Introduction 9
The professional indemnity market fell in 2009 due to lower turnover and premium rates 9
Profit margins in the professional indemnity market have been squeezed due to elevated claim costs 13
The Lloyd's market is in decline, but still writes a significant level of professional indemnity business 16
In the solicitors market, premium rates are being pushed up by the assigned risk pool 19
Insurers covering the surveyors market are experiencing a rise in lending valuation exposure 21
The recession has not had as big an impact on some sectors as it has on solicitors and surveyors 22
Distribution Dynamics 24
National brokers are expected to have seen their share of the commercial insurance market start to plateau in 2009 24
The distribution channels are continually developing to become more efficient for the underwriter, broker, and client 27
Competition Dynamics 29
Generally, the professional indemnity market continues to experience excess capacity 29
Chartis and Chubb increase their market shares while RSA retains its previous year's market share 29
The market remains highly competitive, as the differential in market shares between the top ten players remains low 30
The gross loss ratios for professional indemnity market players decreased in 2009 32
A number of Lloyd’s syndicates have been active in the market recently 34
Future Decoded 35
Introduction 35
The professional indemnity market is forecast to be worth an estimated £1.2bn by 2014 35
The solicitors market is forecast to remain a difficult market environment in the short term 38
The surveyors market will struggle to remain competitive as the impact of the recession is still being reflected in the elevated claims level 40
The accounting sector will continue to remain a soft market over the next 12 months 42
Appendix 44
Definitions 44
Methodology 45
Further reading 46
Ask the analyst 46
Datamonitor consulting 46
Disclaimer 46
TABLE OF FIGURES
Figure 1: The professional indemnity market experienced a 23.8% decline in GWP in 2009 10
Figure 2: GDP was negative for six consecutive quarters during 2008 and 2009 11
Figure 3: The gross loss ratio in 2009 remained well above the long-term average of 76.2% 14
Figure 4: Claims against solicitors have more than doubled in 2009 15
Figure 5: Lloyd's market professional indemnity business continued to decline in 2009 17
Figure 6: The estimated composition of the Lloyd's market's non-US exposure was heavily weighted towards the engineers and architects, and miscellaneous professions in 2009 18
Figure 7: Average house prices in the UK (£), 2000–09 21
Figure 8: National brokers are predicted to have seen a slight decline in their share of the UK commercial insurance market in 2009 26
Figure 9: Chartis has the largest single share of the market in 2009 31
Figure 10: Professional indemnity gross loss ratios (%), by provider, 2009 33
Figure 11: Professional indemnity GWP will grow from 2012 37
Figure 12: The solicitors market will continue to prove tough for competitors in the short term 40
Figure 13: The surveyors market is suffering from increasing levels of overvaluation claims 42
Figure 14: The accountancy market will remain stable 43
TABLE OF TABLES
Table 1: Professional indemnity growth rate (%) and market size (£m), 2005–09 10
Table 2: UK quarterly GDP growth rate (%), 2005 Q1–2010 Q2 12
Table 3: Professional negligence claims and originating proceedings issued in London, by nature of proceedings, 2005–09 16
Table 4: Lloyd’s market professional indemnity business (£m), 2004–09 17
Table 5: Estimated composition of Lloyd's market's non-US exposure (£m), 2004–09 19
Table 6: Average house prices in the UK (£), 2000–09 22
Table 7: Market share of the distribution channels in the commercial general market (%), 2000–09e 27
Table 8: UK professional indemnity market share (%, £m), 2009 31
Table 9: Professional indemnity gross loss ratios (%), by provider, 2004–09 33
Table 10: Key drivers affecting the forecast of the profession indemnity market, 2010–14 36
Table 11: Professional indemnity forecast, GWP (£m, %), 2000–14f 38
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