Professional indemnity insurance is intended to protect professionals financially from any civil liabilities they may incur while operating their businesses or rendering professional services.
Borders will reopen and the economy will gradually recover as the Covid-19 pandemic subsides. There are still a lot of things we do not know, though. While the regional and local markets are still well-served by professional indemnity insurance, price adequacy remains at the center of insurers' approach to underwriting. However, the emphasis for insurers has inherently switched to profitable expansion and long-term stability.
In this article, we take a quick look at how Singapore's professional indemnity market has changed recently and explore potential future developments for this category of insurance.
Market Conditions
A lot of insurers were vying for market share prior to 2019 . As a result, companies that provided professional services had access to wide policy coverages and competitively cost Professional Indemnity insurance.
But in 2019, when there were early indications of rate hardening, the tide began to turn. Unfavorable underwriting outcomes in the fields of engineering and architecture manifested, accentuated by massive losses both domestically and abroad. When COVID-19 first appeared, this got even worse, which caused a further hardening of rates.
Professional Indemnity underwriters increasingly include information about how businesses are responding to the pandemic in their risk assessment. This is largely due to the following reasons:
Increased professional negligence in a setting with more remote work
Increased examination of the precautions used to prevent communicable diseases
Engineering and architectural industries (among others) being impacted by construction delays
Risk Management
Businesses are realizing more and more how important it is to have a strong risk management strategy in place. Professional indemnity insurance unquestionably plays a crucial role in risk management plans, and growing consumer awareness is changing the industry as well.
There is no longer a demand for professional indemnity insurance from merely traditional professions like engineers, attorneys, and accountants. Today, a variety of other professions, including those in marketing, management, and technology, are quickly catching up.
Looking Ahead
Despite growing rates and market conditions that force insurers to be more picky about risks, the outlook for the professional indemnity insurance sector is still positive. Singaporean insurers continue to provide sufficient capacity on fair terms that are proportionate to the risks they are vulnerable to.
One thing is certain: Professional indemnity insurance is a crucial component of any successful risk management strategy, and demand for it in Singapore will increase in tandem with the expansion of companies' reliance on professionals.
If you have any questions regarding professional indemnity insurance, please feel free to message me at 97901583
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