The Custodian Insurance Industry Blog

July 9, 2019

Why is professional indemnity becoming so expensive?

It is easy to look at professional indemnity renewal prices and start frothing at the mouth:

“Why has my broker failed to get me a decent price?” “Why are insurance providers pushing up the price for no reason?” “My business hasn’t changed – why has the premium?”

All reasonable questions.

Let me attempt to explain.

Grenfell. Horrible in every sense of the word, and something of a rude awakening for professional indemnity insurers.

Lloyds. In the wake of Grenfell, Lloyds decides to have a look at the professional indemnity performance of all its esteemed syndicates. The findings are not impressive. The simple rule of insurance is that you collect more premium than claims. Unfortunately this simple rule seemed to have been overlooked…

Lloyds doesn’t like to see its Syndicates consistently lose money in an area. Reason being that, sooner or later, it will get messy for everyone. So they step in and apply pressure on the syndicates.

Professional indemnity then goes from being flavour of the month to a class of insurance that is deemed most likely to cause head aches. To avoid potential headaches (or deal with existing ones) insurers quickly conclude they don’t have a stomach for professional indemnity.

So, basic supply and demand economics come into play: less professional indemnity providers resulting in higher prices.

..And higher prices resulting to the frothing of the mouth at the start of this article!

As a customer, of course, it is frustrating to see your premium go up for no apparent reason. Understood.

However, once the frothing has ended, then why not contact us to see if we can help?

Call 0207 648 4343 or email

We’d love you to stay in touch with us in whichever way you prefer