Martin Swann is Managing Director of Specialty and London Markets at Jensten. With extensive experience across the specialist insurance market, Martin brings a practical perspective on professional indemnity, underwriting discipline and emerging risks. In this article, he reflects on current market conditions, the growing implications of AI and why brokers and underwriters must not lose sight of lessons learned from previous insurance cycles.
The professional indemnity market has a memory problem
Every soft market tells itself the same story: this time, discipline will hold. Our very own Martin Swann, Managing Director of Specialty & London Markets, isn’t buying it. In a recent Insurance Business UK webinar, Swann laid out a picture of the professional indemnity (PI) market that should make underwriters, brokers, and their clients uncomfortable – not because anything has gone wrong yet, but because of how quietly it could.
Capacity is abundant, and that changes behaviour
Swann’s read is nuanced rather than uniformly gloomy, but the underlying dynamic will be familiar to anyone who has lived through an insurance cycle. Capacity is plentiful, and insurers under pressure to hit volume targets are finding ways to write business they might otherwise have declined. The result, in his words, is a market willing to “find a way to write anything almost” in order to book premium ahead of the next hardening.
What makes this particularly worrying to Swann is which classes are exhibiting this behaviour. He singles out fire safety (post-Grenfell), survey and valuation for lending, and structural engineering – sectors that, in his phrase, have “burned people” before. These are exactly the classes that should carry institutional memory of past losses. Instead, rates in some corners of the market are, as he put it, verging on suicidal, with none of the pricing correction that scarred history would normally justify.
Adverse Selection Doesn’t Announce Itself
Perhaps the most useful concept Swann offers is what he calls the invisibility of adverse selection in a soft market. Books of business can look perfectly healthy on paper for a long time – there’s no early warning system built into a bordereau. The trouble only surfaces once claims start landing, at which point disciplined underwriters pull back, other carriers step in to fill the gap (having learned nothing from the exit that preceded them), and the cycle resets. Losses, when they finally arrive, tend to come “hard and fast” rather than gradually, which is exactly why nobody sees them coming until it’s too late to reprice.
It’s a sobering diagnosis: soft-market appetite can masquerade as genuine risk tolerance, and the gap between the two is only visible in hindsight.
Silent AI: where the wording hasn’t caught up
Swann’s most forward-looking comments concerned artificial intelligence, and specifically the growing gap between how firms are actually using it and what their PI policies say about it. Technology-focused PI insurers have largely moved to cover AI affirmatively, both in AI-related deliverables and in the use of AI to deliver services. Broader commercial PI, in his assessment, has not moved at the same pace.
That matters because most commercial PI wordings carry provisions around reckless conduct, and none of them define what reckless looks like where AI is involved. Is deploying AI-assisted advice without documented governance, oversight or output validation reckless? Nobody has written it down either way. Swann’s point is not that anyone is being obstructive, but that the language has not yet caught up with the practice. While it hasn’t, clients are carrying an unquantified risk, and so are brokers.
For brokers specifically, Swann frames this as more than a product gap, it’s a professional duty. If brokers aren’t asking clients how they’re using AI, what governance sits around it, and whether that information is being relayed back to insurers, they’re leaving themselves exposed. Should an insurer later decline a claim citing reckless conduct, the broker who never asked the question in the first place is in a far weaker position than one who did, regardless of how that coverage argument ultimately resolves. It’s the kind of exposure that doesn’t show up until an E&O claim forces the issue, by which point it’s a conduct problem, not just a coverage one.
Price Is King – And That’s the Problem
Products and premiums are reaching the market without brokers always getting a genuine opportunity to review whether they are fit for purpose. Meanwhile, competitive pressure is training clients, and the brokers serving them, to treat price as the primary differentiator, with coverage quality and certainty of claims payment sliding down the priority list.
Swann’s rebuttal to this is direct: the market’s job was never to guarantee that a policy will actually pay out; that responsibility sits with the broking profession. An insurance policy is fundamentally a promise to pay, and recommending one without genuine confidence that it will meet the claims it’s meant to cover is, in his view, an abdication of that duty. Claims attrition may be at a cyclical low right now, but it will not stay there, and when it turns, the brokers who prioritised fit-for-purpose cover over the cheapest quote will be the ones whose clients are actually protected.
The common thread
“If there’s one thread running through all of this – the underwriting classes with short memories, the AI governance gap nobody’s defined, the price-first wholesale behaviour – it’s that soft markets are brilliant at rewarding forgetfulness. Nothing goes wrong today. Nothing goes wrong tomorrow either. That’s precisely the problem, because it teaches everyone involved that the old lessons don’t apply anymore, right up until the moment they very much do.
I don’t think the answer is panic. I think it’s just discipline – asking the uncomfortable question now, on wording, on governance, on whether a quote that looks too good really is too good, rather than waiting for a claim to force the conversation. We’ve been here before. I’d rather we remembered that this time.” Martin Swann
Click the link below to view the IBUK Professional Risk Roundtable
