According to insurance broker Aon, securing professional indemnity cover will remain tough for building certifiers and other high-risk professionals as insurers look to cut their losses a new report says.
Insurers lost $1.03 for every $1 in premium earned the broker said, citing statistics from the Australian Prudential Regulatory Authority. Aon added that with limited investment return, insurers are experiencing increased scrutiny from overseas parent entities and Lloyd’s to return their books to profitability and as a result several Lloyd’s syndicates have stopped underwriting Australian professional indemnity business and Australian insurers are reassessing their appetite for certain professions. Less competition has allowed other insurers to return to profitability by applying significant premium increases.
Certifiers, fire engineers and other consultants caught up in the construction industry’s cladding crisis are encountering triple-figure premium increases – if they can find an insurer willing to provide cover the report says.
The professional indemnity market continues to deteriorate and has become severe for some industries. Increased claims activity and several large settlements have tipped insurers loss ratios to unprofitable with consultants exposed to cladding the most heavily impacted and experiencing significant premium increases.
Aon said that looking ahead, the trajectory will continue to worsen for some industries.
The situation is also grim for lawyers and accountants, as insurers are worried about the rising number of shareholder class actions and merger and acquisition activities.