June 17, 2024

Navigating Difficult Terrain in Professional Indemnity with Anthony Hinde

Insights Australia

In a recent article with Insurance Business Australia, Anthony Hinde, Underwriting Manager, Professional Indemnity (PI) emphasises the importance of maintaining underwriting discipline, and the invaluable role of experienced underwriters in navigating terrain that demands a high level of skill.

How do you see the PI market, generally speaking?

Australia is a highly regulated and notably litigious region where professional indemnity insurance is commonly relied upon to defend or protect organisations. The PI market is therefore a mature one; however, it has undergone a challenging period in the last five years, which has resulted in several insurers exiting the market. More recently, as market conditions have stabilised, there have been signs of green shoots emerging with new capacity entering the sector, including from London Market insurers.

While this is a positive development for the sector, it’s important to recognise the ongoing economic challenges, including interest rate hikes and the slowdown in growth across the region. Such dynamics traditionally result in an increase in PI-related claims as the advice of consultants or advisers comes under greater scrutiny and the potential for litigation increases. It is therefore imperative to maintain underwriting discipline in this sector. In the current conditions, the underwriter’s experience is invaluable, and the quality and scope of the cover provided becomes even more important given the increased claims potential and need for robust protection.

What’s behind the changes we are seeing in the market?

As mentioned, there is an increasing inflow of new capacity coming into the market both from insurers new to the sector and those who have previously withdrawn looking to re-enter. We’re seeing that much of this new capacity is currently being deployed in the larger corporate space and in particular on providing excess layers cover. We have also seen evidence of increased commoditisation of the PI insurance product as some insurers are shifting more towards transacting business online. While this creates efficiencies, given the complex nature of the market it’s important to recognise the value of being able to develop bespoke cover that provides the strength of protection professionals require.

What is your point of difference for PI? Why is this important?

Arch has a long-standing presence in the Australian PI market, having entered the sector in 2015, and we have continuously strengthened that presence throughout the varying market conditions. We are proud to be recognised by our brokers as a long-term and reliable partner with meaningful capacity. We have an experienced local PI team with deep technical expertise and understanding of the Australian market, as well as strong relationships with our partners and clients that have stood the test of time.

Our underwriting approach is also a key market differentiator. We are focused on having underwriters on the ground who are eager to trade and to discuss risks directly with brokers. Our team are empowered to ‘do the deal’ and are experienced in structuring bespoke policies to ensure the best possible coverage for our mutual clients. Our trading attitude is very much “trade the way our brokers want to trade”. For many of our broking partners, they are keen to discuss their clients’ needs face-to-face with our underwriting team and with an underwriter that they know and trust – this consistency of approach and relationship building is very important to us.

We also have a highly experienced local claims team. That means that when the time comes to call upon the policy, we have the expert knowledge on hand to manage the claim quickly and professionally in order to achieve the most effective resolution.

Read the full article.

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