Increases in rate (applied to professional fees to generate premium) were double digit year-on-year; frequently more.
Whilst design and build contractors faced the brunt of these, it is fair to say that all buyers of PI in the construction sector were affected in one way or another. Again, the recent survey undertaken by the CLC confirms that one in five respondents are paying more that 5% of their turnover of annual PI premiums, with one in 20 paying more that 10%; clearly significantly substantial sums that are not sustainable in the long-term.
Against this backdrop, it is encouraging to note that the first half of 2022 saw rate increases starting to level out.
The corrective action taken by PI insurers to remediate their books appears to be paying dividends and insurers are no longer seeking sizeable rate increases on a portfolio basis. Pleasingly, risks are being reviewed and rated individually and insurers have been more open to discussions around containing rate/premium increases. Generally speaking, during this period we saw average rate increases of between 5% to 10%.
Underwriting appetite is starting to return and whilst the approach for the first half was cautious, there were signs that insurers have new business budgets to meet and that they are looking to grow their portfolios for well managed business.