Ouch! Warnings at last week’s IBNA conference in Darwin that brokers should prepare for PI premium rises of around 300% haven’t surprised anyone who follows the liability market.

Marsh principal Jacques Moritz issued the warning and Frank Earl, MD of Arthur J Gallagher Professional Services Australasia, “agrees absolutely” that increases will reach those kinds of levels.

Mr Earl, who is also Vice President of NIBA, said PI is capital-intensive. “For every $1 in premium, underwriters have to charge $1 in capital,” he said. “That’s the reality.”

NIBA Chief Noel Pettersen, whose association operates the largest broker PI facility, said he is conscious that brokers have already been through PI renewals last year. And as for future rises: “No one is immune, unfortunately.”

“We have got our brokers working flat out to get members the best possible rates. But anyone that has been out of the NIBA facility for a while will find it difficult trying to get back in,” he said.

And as Mr Earl pointed out, the rate will come back once the market softens again. “It’s just part of the cycle.”