Professional indemnity rates are soaring by up to 200% and the hard market conditions are changing the way brokers work, according to PI specialist Alexander Forbes.
Divisional director Belinda Musson, speaking yesterday at the conference, said the tough conditions were forcing brokers to adopt a strictly pro-active approach to their clients, few of whom were seeing their PI premiums rise by less than 70%.
"This year is unprecedented," she said. "The reduced capacity and higher premiums are making life very tough.
"You have to fight to retain your business and get new business. Brokers are more likely to get claims notified against them, too."
Brokers were also having to tighten up the way they offer cover under permission delegated by an underwriter.
"A lot of brokers have been exceeding their binding authorities," Musson said.
Anybody using binding authorities were now coming under the spotlight when underwriters were offering PI cover.
She said such delegated powers should be used with far greater care than has been common until now.
"There should only be certain numbers of people who have the authority and
they should have a lot of experience - say six years or 10 years. To restrict binding authorities would make a lot of provincial brokers suffer but what's needed is more sensible use."
In general, brokers were having to talk their clients through the difficult market conditions by explaining the reasons behind the shortage of capacity that has helped drive some rates sky-high.
And offering the US terrorist attacks as a catch-all explanation would not hold water.
"They just speeded up what was going to happen anyway," she said.
"We would have been where we are now within 12 or 18 months anyway."
