UK PI insurers buoyant despite economic headwinds

Despite concerns over the macroeconomic and geopolitical climate, UK PI insurers remain confident as 2024 approaches. A significant majority (95%) expect their appetite for business to increase or at least to remain the same over the coming year, according to law firm Clyde & Co’s latest annual survey of the market.

In response to the survey carried out at the end of summer, insurers said that they felt an improved sense of stability in the UK PI market, expressing confidence in the levels of available capacity and a clear expectation that buyers will be able to maintain existing policy limits.

Appetite is notably high for miscellaneous lines, and other areas that ten years ago might have been considered distressed.

Rob Crossingham, partner at Clyde & Co, noted: “There is clearly a strong appetite for PI business across the United Kingdom, despite the macroeconomic and geopolitical backdrop. The survey showed really encouraging signs about the professionalism and stability of the PI market -- nationwide -- which will be hugely important for the UK economy as we navigate uncertain times.”

The availability of PI to professionals operating in areas where there are traditionally high claims volumes is critical to the UK economy and essential in ensuring the accessibility of professional advice to those who need it.

Further findings (Source: Clyde & Co)

PI insurers identified several clear challenges ahead, notably recessionary pressures, claims inflation and increasing cyber risks as well as new challenges arising from ESG and AI.

The proportion of respondents who identified the use of AI by professional services firms as a concern (70%) has almost doubled since the 2022 survey highlighting the potential downsides of new technology as well as the significant upsides.

While a large proportion of respondents believe that the frequency (83%) and/or severity (71%) of overall claims will increase in the next 24 months, the market appears confident in its ability to weather this with a proactive approach to risk management. As in previous years, insurers reported plans to continue to review wordings regularly, and a significant proportion expect their underwriters to navigate known exposures by restricting cover for specific perils.

This year’s report also highlighted the growing trend for the development of UK regional insurance centres outside of traditional London-headquartered operations, driven by improved technology, flexible work patterns, cost effectiveness and a growing appetite among clients for a regional solution to their needs. Among those cities where there has been significant growth in recent years are Bristol, Birmingham, Leeds, Manchester, Edinburgh and Belfast.

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