Professional Indemnity Market Report – Rates Fall at Unprecedented Speeds

The professional indemnity (PI) insurance market experienced a surprising shift in 2024, with rates falling at “unprecedented speeds,” defying the expectations of another year of stabilisation, according to the fourth edition of the UK PI Market report by a leading law firm, Clyde & Co.

The report, based on insights from underwriters, claims managers, and brokers, revealed that 56% of respondents anticipated no rate increases in 2024. However, increased competition from Managing General Agents (MGAs) has contributed to a significant drop in rates.

“The PI market is being tested again” said Sam Godding, legal director at Clyde & Co. “But amidst the uncertainty, transformation within the sector is bringing significant opportunity.”

Some key findings from the Professional Indemnity Market Report include - 

Capital Allocation as a Key Influence: About 31% of respondents identified capital allocation as the most important structural influence on the volume of PI business written in the UK over the next year.

Claims Expected to Increase: As market capacity grows, 90% of respondents predict an increase in PI claims over the next two years, with 74% expecting claims severity to rise.

Regional Growth Outside London: Growth in PI claims handling and underwriting hubs is on the rise outside London:

• • 29% of respondents anticipate growth in these roles in the South of England.
  • 50% foresee growth in the North of England, driven by major construction projects and professional sector developments.
  • Scotland, Wales, and Northern Ireland present mixed opportunities, with growth tempered by political uncertainty and the complexities of devolved governments.

Technology as a Driving Force: Over 60% of respondents believe that emerging technologies, including AI and cyber advancements, will further drive demand for PI cover. However, 72% expressed concerns about AI increasing professional risks with 82% highlighting inaccuracy and false information as their primary concerns.

The findings underscore a rapidly evolving PI landscape, shaped by growing competition, regional development, and technological advancements. While challenges remain, the report highlights significant opportunities for transformation and growth within the sector.