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Professional Indemnity Insurance in Canada

  • March 2016
  • -
  • Finaccord
  • -
  • 34 pages

Professional Indemnity Insurance in Canada is a report about the Canadian market for and distribution of policies covering professional liability. For 2011, 2015 and with a forecast for 2019, the study breaks down the market for professional indemnity insurance on a standardised basis by professional group with 13 categories considered as follows:

accountancy and finance;
architecture;
D&B (design and build);
engineering;
estate agency;
financial and insurance intermediation;
healthcare-related services;
IT and business consulting;
legal services;
media and marketing;
medicine and dentistry;
surveying;
other professional sectors.
In particular, the report quantifies the number, growth in number and segmentation of insurable enterprises in Canada from 2011 to 2015 plus the value, growth and segmentation of the market for professional indemnity insurance over the same time frame and with a forecast to 2019. These segmentations are provided not only for each of the 13 aforementioned professional categories but also by annual fee income or turnover band in order to show the potential and actual market value in Canada attributable to the largest and smallest professional enterprises.

In addition, three further segmentations of the market value in 2015 are also given: between business dealt with by domestic underwriters and that placed with non-domestic underwriters; between new business and renewals; and between primary layer and excess layer business.

Moreover, on the basis of a survey of leading brokers of professional liability cover in Canada, the report identifies the underwriters of this type of insurance that are used most frequently and provides estimates for the market shares by premium income of leading underwriters in 2015 for all forms of professional indemnity cover combined expressed as a percentage range (e.g. 5.0% to 7.5%).

Finally, the study identifies affinity schemes for professional liability insurance in Canada set up between professional / trade associations with a nationwide remit and brokers or underwriters of this type of cover (based on a survey of close to 150 such associations), highlights other distribution channels used to sell this form of insurance (e.g. brokers, direct sales, online aggregators, other affinity partners) and discusses key issues associated with the market.

Table Of Contents

Professional Indemnity Insurance in Canada
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
Finaccord's study breaks down individual country markets into 13 professional categories… 3
… with a number of other key segmentations also provided 3
Rationale 3
This series of reports delivers up-to-date research about a complex, multi-faceted insurance sector… 3
with affinity schemes researched in detail through the associated PartnerBASE dataset 4
Methodology 4
Survey of professional and trade associations 4
Survey of brokers and underwriters 4
Market data 6
Definitions 6
Professional indemnity insurance 6
Professional categories 7
Operating models 8
Other notes 9
PartnerBASE and market data file 9
Finaccord 9
20 MARKET ANALYSIS 11
Introduction 11
Number, growth in number and segmentation of insurable enterprises 12
The largest category accounts for 22% of insurable professional enterprises 12
Most categories saw a rise in their number of insurable enterprises from 2011 to 2015… 13
… with growth most apparent among larger firms 14
Market value, growth and segmentation 16
The value of the market for professional liability insurance in Canada has increased rapidly… 16
… mainly as a result of surge in premiums in the medicine and dentistry segment 16
Close to three quarters of all insurable enterprises have taken out professional liability cover 16
A significant proportion of premiums is paid by firms with annual fee income or turnover below USD 1 million 18
The CMPA provides insurance for a majority of medical practitioners in Canada… 20
while the HIROC is the main insurer for hospitals 20
LAWPRO is the largest provider of professional liability insurance for lawyers 20
while the CLIA is used as an insurance exchange for professional risks in several provinces 20
Around a quarter of the Canadian market is dealt with by underwriters outside of Canada… 21
… and approximately one fifth of premiums are due to new business 22
Excess layer business makes up a relatively small proportion of the total market 23
Underwriter utilisation and market shares 24
Encon, Chubb and Lloyd's of London enjoy the highest reported utilisation among brokers… 24
… albeit there is a long tail of smaller underwriters 24
Two underwriters are likely to hold a market share of premiums in excess of 20% 25
… with those outside of the top ten together accounting for up to 20% of the market 25
Including MGAs, there are around 45 underwriters of professional liability cover in total… 26
… comprising both specialists and multi-category underwriters 27
Affinity schemes with professional and trade associations 27
Most affinity partnerships with associations are intermediated by an external broker… 27
… with LMS Prolink claiming the most such relationships 28
PROFESSIONAL INDEMNITY INSURANCE IN CANADA
© FINACCORD (02/2016) ii
Only two underwriters can be identified in conjunction with more than one nationwide affinity scheme 29
Other distribution channels 30
Brokers 30
Numerous brokers possess demonstrable expertise in professional indemnity cover… 30
… and Rogers Insurance (through Easycover) has set up a dedicated online proposition for it 31
Direct sales 31
Online aggregators 31
Several insurance comparison sites offer quotes for professional liability cover 31
Other affinity partners 31
Market value forecast 31
Further significant growth in premiums is predicted for the period from 2015 to 2019… 31
… with this forecast applying across all annual fee income and turnover bands 33

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Number of insurable enterprises and value of professional indemnity insurance in Canada, segmented by professional sector, 2015 2
10 INTRODUCTION 3
Professional associations contacted by Finaccord, segmented by professional category and membership type 5
20 MARKET ANALYSIS 11
Number of insurable enterprises in Canada, segmented by professional sector, 2015 12
Compound annual growth or decline in number of insurable enterprises in Canada, segmented by professional sector, 2011 to 2015 13
Number of insurable enterprises in Canada, segmented by professional sector, 2011 and 2015 (table) 14
Number of insurable enterprises in Canada, segmented by annual fee income / turnover band, 2011 and 2015 15
Number of insurable enterprises in Canada, segmented by annual fee income / turnover band, 2011 and 2015 (table) 15
Gross written premiums for professional indemnity insurance in Canada, segmented by professional sector, 2011 and 2015 17
Gross written premiums for professional indemnity insurance in Canada, segmented by professional sector, 2011 and 2015 (table) 18
Gross written premiums for professional indemnity insurance in Canada, segmented by annual fee income / turnover band, 2011 and 2015 19
Gross written premiums for professional indemnity insurance in Canada, segmented by annual fee income / turnover band, 2011 and 2015 (table) 19
Gross written premiums for professional indemnity insurance in Canada segmented between domestic and non-domestic underwriters, 2015 21
Gross written premiums for professional indemnity insurance in Canada segmented between new business and renewals, 2015 22
Gross written premiums for professional indemnity insurance in Canada segmented between primary and excess layer business, 2015 23
Percentage of brokers surveyed making regular use of particular underwriters for professional indemnity insurance in Canada, 2015 25
Estimated market shares of underwriters of professional indemnity insurance in Canada, 2015 26
Estimated market shares of underwriters of professional indemnity insurance in Canada, 2015 (table) 27
Affinity schemes for professional indemnity insurance offered through professional and trade associations in Canada: provision rate and operating models, 2015 28
Affinity schemes for professional indemnity insurance offered through professional and trade associations in Canada: broker share of partnerships, 2015 29
Affinity schemes for professional indemnity insurance offered through professional and trade associations in Canada: underwriter share of partnerships, 2015 30
Gross written premiums for professional indemnity insurance in Canada, segmented by professional sector, 2019 (forecast) 32
Gross written premiums for professional indemnity insurance in Canada, segmented by professional sector, 2019 (forecast) (table) 33
Gross written premiums for professional indemnity insurance in Canada, segmented by annual fee income / turnover band, 2019 (forecast) 34
Gross written premiums for professional indemnity insurance in Canada, segmented by annual fee income / turnover band, 2019 (forecast) (table) 34

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