As the number of businesses continues to grow and more employees require insurance, prices will rise; an increase in claims made will also contribute to higher overhead costs and growing prices as insurance carriers pay out more claims
Los Angeles, CA (PRWEB) October 17, 2014
Professional indemnity insurance has a buyer power score of 3.8 out of 5. Buyers gain negotiation power from high competition and a low market share concentration among suppliers; however, buyers are limited by a low level of substitutes. IBISWorld estimates that there are 450 professional indemnity insurance providers in the United States, the top four of which are AIG, Allstate Corporation, The Travelers Company and Geico. Firms in this market range from large, public companies to small businesses with few employees, and many have multiple offices in different regions. Additionally, buyers have limited ability to lower their risk, especially if employees are in riskier positions, such as in health or law. Even so, buyers may take specific measures to attempt to lower their risk and to lock in ideal premium rates.
“As the economy continues to recover, many buyers have become more aware of their risk levels and a need for insurance. As the economy has improved in the past three years, corporate profit and the number of employees have grown. Because businesses must pay more insurance if they have a greater quantity of employees, insurance premiums have increased as well,” according to IBISWorld business research analyst Aileen Weiss.
Additionally, in the past three years, competition among professional indemnity insurance providers increased as suppliers fought for a greater share of the market. This gave buyers more negotiating power to lock in favorable premium prices. However, to cover overhead costs and maintain their profit margins, insurance providers still increased prices during the period.
In the next three years, buyers will face a hard market and prices will continue to rise. In a hard market, buyers will be met with higher insurance premiums and stricter underwriting requirements. In addition, fewer insurance policies will be issued. To reduce risk and secure more favorable premiums, buyers should implement safety programs and risk prevention training. Additionally, buyers should ensure risk and claim activity is being managed and tracked carefully. Finally, to negotiate for discounts and to avoid any gaps in policies, buyers should start the renewal process earlier.
“Regardless of the premium price, the buyer should select a professional indemnity insurance provider that is financially stable and capable of paying out on claims. Even if a premium seems expensive, having insurance can save a buyer from a costly lawsuit in the future. Thus, the buyer must assess all potential risks when purchasing professional indemnity insurance,” Weiss says. For more information, visit IBISWorld’s Professional Indemnity Insurance procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of professional indemnity insurance, also known as professional liability insurance or errors and omissions insurance. For medical professionals, it is commonly called medical malpractice insurance. This insurance provides coverage against negligence claims made by clients. It covers the cost of defending against the claim, as well as paying any damages awarded to the litigant. Different types of indemnity include repairs, replacement, cash payments and reinstatement. This report excludes other types of insurance, such as building contents insurance, cargo insurance, reinsurance and business interruption insurance.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.