Rates soar as insurer appetite shrinks

Brokers are working around the clock as frantic solicitors try to arrange professional indemnity (PI) insurance before the 1 October deadline, following the exit of Berliner from the market – but rates are soaring as insurers’ appetites for smaller firms shrink.

In some cases, firms that had taken out insurance with Berliner have been quoted premiums as high as 400% more on the open market.

United Insurance Brokers director Simon Lovat said his firm had seen a sharp increase in enquiries since last Monday, when news broke of Berliner’s withdrawal.

Staff had to work through the weekend in what Lovat described as “the most significant thing that has happened in the buying season”.

In one case, a firm that previously paid a £56,000 premium to Berliner had been quoted £260,000. Lovat said the disparity was common and the higher figure closer to a fair market rate.

More than 1,000 customers of unrated PI insurer Berliner were told they had to find alternative cover after the company withdrew from the market. Many of the company’s clients had transferred from Latvian insurer Balva, which was ordered to wind up in June.

Lovat said the buying strategy of firms had changed from waiting until the 1 October deadline to get a cheap premium to scrambling to get cover in a market that has decreased capacity.

He said: “It’s not about best price – it’s about did you get a price? How you buy your insurance is now fundamentally driven by how the market is reacting to this event.”

Lovat has also seen an increase in the number of firms who omit vital documents for their applications as they struggle to get to grips with the most recent application system.

Apex Insurance Brokers director Matt Bartlett said his firm had received a new enquiry every few minutes, with premiums often double the sum Berliner had quoted.

Bartlett said: “A lot of people I am speaking to are expressing concern that they will not be able to find cover and are obviously stressed and want terms as soon as soon as possible.”

Any firm that is unable to get a renewal by the deadline will be given a 90-day policy extension from their previous insurer, in the form of an extended indemnity period and cessation period. 

Outside of this time and without insurance cover they will not be able to trade and their insurer will be required to provide them with the mandatory six years of run-off cover.