Options in Australia’s PI market are shrinking: AonAugust 21 2019 by Andrew Tjaardstra
The professional indemnity market in Australia is being squeezed as insurers move out of the market to avoid unprofitable business, according to Aon.
Increased claims activity including some large settlements has pushed combined operating ratios above 100% meaning insurers are paying out A$1.03 (US$0.7) for every A$1 in premium earned in the first quarter from the Australian Prudential Regulation Authority.
Aon’s PI Q3 Market Insights report stated: “With limited investment return, insurers are experiencing increased scrutiny from overseas parent entities and Lloyd’s to return their books to profitability.”
It added: “As a result, several Lloyd’s syndicates have stopped writing Australian PI business and Australian insurers are reassessing their appetite for certain professions. Less competition has allowed other insurers to return to profitability by significantly increasing their premiums.”
“The [PI] insurance market continues to deteriorate and has become severe for some industries. Consultants exposed to cladding such as fire engineers, building certifiers, facade manufactures, and valuers have been impacted the most. They’re experiencing three figure premium increases if they can even obtain insurance at all.”
The market has also been hit by a number of scandals in financial services.
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