According to the report, the professional indemnity insurance category grew at a compound annual growth rate of 7.15% during 2010–2014 and was worth GBP1.17 billion in gross written premium at the end of 2014.
Timetric forecasts the category to reach over GBP1.5 billion in 2019. Supportive trends in business population and confidence, directors’ rising public exposure through social media, and increasing regulatory activity are all set to push demand for professional indemnity and D&O policies. Moreover, UK’s insurers identified additional potential in the thriving SME segment, where penetration is still at low levels.
“With Direct Line’s market entry this year, a new competitor is ready to increase capacity in the SME market and take some market share in the category,” comments Steffen Mueller, financial services analyst at Timetric.
“However, while the professional indemnity market is still one of the UK’s least concentrated insurance markets, market power is now gradually shifting to the larger professional indemnity insurers like AIG and Hiscox,” he continues.
According to the report, the top five professional indemnity insurers increased their combined market share from 44.5% in 2012 to 52.8% in 2014.
“A merger between Zurich and Royal & Sun Alliance is currently under consideration, which would create a new big player in the sector. Regardless of this merger becoming reality, however, the next years will be marked by a trend towards concentration and consolidation,” Mueller concludes.
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