Professional indemnity (Liability) insurance: Global perspectives
The US alone accounts for 53.4% of the global market for professional indemnity insurance for which premiums are on track to be worth USD 40.5 billion by 2019.
The global market for professional indemnity (liability) insurance was worth around USD 36.2 billion in gross written premiums in 2015 with USD 19.4 billion (53.4%) of this due to the US and the remaining USD 16.8 billion (46.6%) to all other countries combined. Moreover, by professional category, the worldwide market broke down in the same year between around USD 17.9 billion due to medical malpractice cover, around USD 3.6 billion to professionals in the architecture, D&B, engineering and surveying segments combined, and around USD 14.7 billion to professionals in all other segments combined. These are key, high-level findings from a new series of research studies issued by Finaccord during the first half of 2016 about the global market for professional indemnity cover.
Commented Claire Michaud, Consultant at Finaccord: “Professional indemnity insurance represents around 16.6% of the global market for commercial liability insurance given that the latter was worth around USD 217.5 billion in 2015. It has risen from about USD 33.0 billion in 2011 and while this appears to be a relatively slow rate of increase at a nominal compound annual growth rate of 2.4%, the overall total was held back by a decline in the US medical malpractice insurance market. Without this, the compound annual growth rate would have been significantly faster at 3.9%.”
Overall, Finaccord’s research provides in-depth coverage of the market for professional indemnity insurance in 20 countries – namely Australia, Austria, Belgium, Brazil, Canada, France, Germany, India, Ireland, Italy, Japan, Mexico, the Netherlands, Poland, South Africa, Spain, Sweden, Switzerland, the UK, and the US – and establishes that there are huge differences between developed markets such as the UK and the US, on one hand, and developing ones, such as Brazil and India, on the other.
Said Francisco Leitão, Consultant at Finaccord: “The extent to which markets for professional indemnity insurance are substantial or not depends on a number of factors. These include whether professional enterprises and individuals in particular countries are compelled or not to acquire insurance for their professional risks, the degree to which a significant culture of litigation exists in those countries and the propensity of customers in those countries to buy insurance generally. Also, in some countries, alternative systems are used to deal with particular types of professional risk; for example, in Sweden, demand for medical malpractice insurance is limited because a patients’ insurance scheme covers all medical liability risks for public hospitals and general practitioners, who together are responsible for around 95% of Swedish medical care.”
Looking ahead, Finaccord forecasts that premiums for professional indemnity insurance worldwide will increase to a value of around USD 40.5 billion by 2019. In most cases, growth is likely to be faster in less developed markets than in developed ones although much also depends on the degree to which significant competition exists among underwriters in this field and on future claims experience in each country.
Concluded Claire Michaud: “It is generally likely that growth will be more rapid in segments in which the number of insurable entities is rising quickly and for which purchase of insurance for professional risks has historically not been viewed as essential, especially among smaller enterprises and individuals. Examples of such segments are IT, business consulting and healthcare-related services, with the latter including diverse fields such as chiropody, midwifery, nursing, physiotherapy and radiography plus residential care and veterinary activities, and alternative medical activities including acupuncture, herbalism, homeopathy, hypnosis, naturopathy and nutritional-based therapies.”
