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Professional Indemnity Insurance in Germany

  • February 2016
  • -
  • Finaccord
  • -
  • 34 pages

Professional Indemnity Insurance in Germany is a report about the German 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 Germany 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 Germany 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 indemnity cover in Germany, 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 indemnity insurance in Germany 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 200 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 Germany
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 6
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
IT and business consulting firms make up the highest proportion of insurable enterprises… 12
… and their number has also been growing most rapidly 12
The vast majority of insurable enterprises have annual fee income or turnover in the lowest band 14
Market value, growth and segmentation 16
Insurance is compulsory for several professions and strictly enforced for lawyers and tax advisors 16
Premiums have risen most quickly in the medicine and dentistry category… 16
… which is also the sector generating the highest value of premiums 16
Less than a half of insurable enterprises in Germany have actually bought this type of cover 16
Close to a half of the total market value is generated by smaller professional enterprises 18
The number of hospitals in Germany has declined steadily over the last two decades… 20
… albeit hospitals still account for around two thirds of claims in the medicine and dentistry category 20
A number of underwriters have exited this market due to high losses… 20
… which has also caused hospitals to accept high excess levels in return for affordable cover 20
Providing cover for midwives has been another problematic area for German insurers 20
Virtually all German professional indemnity business is underwritten in Germany itself… 21
… with new business accounting for around a quarter of the total market value each year… 22
… and excess layer business a fairly significant proportion 23
Underwriter utilisation and market shares 23
Two insurers are utilised by more than a half of brokers placing professional indemnity risks… 23
… and the same companies are also likely to be the clear market leaders… 24
… in an overall market for professional indemnity cover in which around 45 underwriters are competing… 25
… including several with strengths in particular categories 25
Affinity schemes with professional and trade associations 27
More than half of associations researched have an affinity scheme for professional indemnity cover… 27
… with Aon subsidiary UNITA having secured the most partnerships among brokers… 27
followed by Ecclesia, Funk, Howden Caninenberg and UFB: UMU 28
Among underwriters, HDI has secured involvement in the highest number of affinity schemes 29
Other distribution channels 30
Brokers 30
Brokers of professional indemnity cover also include both generalist and specialist intermediaries… 30
… with the latter including AIA and exali, among others 30
Direct sales 31
Many underwriters sell policies on a direct basis but generally not as an online-only proposition 31
Online aggregators 31
A few aggregators have extended their offer to include professional indemnity policies 31
Other affinity partners 31
This type of insurance is also on offer from some banks and sports organisations 31
Market value forecast 31
Growth in premiums is anticipated across all professional categories up to 2019… 31
… with business rising most among entities with annual fee income or turnover in the highest band 33

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Number of insurable enterprises and value of professional indemnity insurance in Germany, 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 Germany, segmented by professional sector, 2015 12
Compound annual growth or decline in number of insurable enterprises in Germany, segmented by professional sector, 2011 to 2015 13
Number of insurable enterprises in Germany, segmented by professional sector, 2011 and 2015 (table) 14
Number of insurable enterprises in Germany, segmented by annual fee income / turnover band, 2011 and 2015 15
Number of insurable enterprises in Germany, segmented by annual fee income / turnover band, 2011 and 2015 (table) 15
Gross written premiums for professional indemnity insurance in Germany, segmented by professional sector, 2011 and 2015 17
Gross written premiums for professional indemnity insurance in Germany, segmented by professional sector, 2011 and 2015 (table) 18
Gross written premiums for professional indemnity insurance in Germany, segmented by annual fee income / turnover band, 2011 and 2015 19
Gross written premiums for professional indemnity insurance in Germany, segmented by annual fee income / turnover band, 2011 and 2015 (table) 19
Gross written premiums for professional indemnity insurance in Germany segmented between domestic and non-domestic underwriters, 2015 21
Gross written premiums for professional indemnity insurance in Germany segmented between new business and renewals, 2015 22
Gross written premiums for professional indemnity insurance in Germany segmented between primary and excess layer business, 2015 23
Percentage of brokers surveyed making regular use of particular underwriters for professional indemnity insurance in Germany, 2015 24
Estimated market shares of underwriters of professional indemnity insurance in Germany, 2015 26
Estimated market shares of underwriters of professional indemnity insurance in Germany, 2015 (table) 27
Affinity schemes for professional indemnity insurance offered through professional and trade associations in Germany: provision rate and operating models, 2015 28
Affinity schemes for professional indemnity insurance offered through professional and trade associations in Germany: broker share of partnerships, 2015 29
Affinity schemes for professional indemnity insurance offered through professional and trade associations in Germany: underwriter share of partnerships, 2015 30
Gross written premiums for professional indemnity insurance in Germany, segmented by professional sector, 2019 (forecast) 32
Gross written premiums for professional indemnity insurance in Germany, segmented by professional sector, 2019 (forecast) (table) 33
Gross written premiums for professional indemnity insurance in Germany, segmented by annual fee income / turnover band, 2019 (forecast) 34
Gross written premiums for professional indemnity insurance in Germany, segmented by annual fee income / turnover band, 2019 (forecast) (table) 34

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