Growth driven by directors’ rising public exposure through social media and increasing regulatory activity
The professional indemnity and directors’ and officers’ (D&O) insurance sector is set to grow to more than £1.5bn in gross written premium (GWP) by 2019, according to research firm Timetric.
The study said the sector had grown annually by 7.15% during 2010-2014 and was worth £1.17bn in GWP at the end of 2014.
However, the report found that increasing consolidation was shifting market power to the larger players.
The research firm said supportive trends in business population and confidence, directors’ rising public exposure through social media, and increasing regulatory activity would push demand for professional indemnity and D&O policies.
Insurers have also identified additional potential in the thriving SME segment, where penetration is still at low levels, Timetric added.
Financial services analyst Steffen Mueller said: “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.”
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.
Mueller added: “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.
“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.”
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