Premiums for PII have been on the rise since 2019, prompting many solicitors to dread the arrival of summer with the usual request for time-consuming renewal forms.
A constant stream of annoying brokers banging on the door to quote doesn’t help to lighten the burden.
This year, however, the marketplace might be a little easier for well-run practices
Many firms renewing in April found that premium rates had levelled off. Legal practices’ financial results coming out of the lockdown period were strong and this can push premiums up, even if Insurers risk-based rates stay the same.
Anecdotally, many Insurers say that claims are increasing, and we have certainly experienced a rise in the number of disputes with eye-watering potential.
Despite this, the same Insurers have a healthy appetite to grow their solicitors PII portfolios, for the first time in several years.
What might solicitors PII October renewals look like?
Increased interest from the current range of Insurers is encouraging and should improve competition to benefit policyholders. What would really make life interesting, though, is new Insurers entering the marketplace.
At this time of year, rumours of new Insurers are a constant feature, but this year there might actually be some.
A number of Insurers are actively working on entering for the first time, and experience has shown us that the arrival of new players is the key ingredient for moving the market in policyholder’s favour.
Whether this happens in time for October renewal remains to be seen, but if the deadline is missed, new capacity should be in place in time for April 2024 – watch this space!
Current insurers are likely to raise rates by 5%-10% – but for Insurers with a challenging book of business, the increases might be higher as policyholders will have fewer alternatives.
How can you source the best deal for your firm?
Start early – don’t leave renewal applications until you get back from summer holidays.
Avoid being a tail ender – quote requests in September don’t get the best reception. Not only does this create additional pressure for you, insurers and brokers, but it also encourages underwriters to ponder how other essential features of running a law firm might not receive appropriate care.
Use an experienced broker with time for you – market knowledge is the broker’s stock-in-trade and agreeing a renewal strategy that’s right for your firm is essential. Volume brokers that dominate the market have their place, but even if you pay a seriously large premium, you might find it hard to get enough experienced, attentive service if you are one of thousands of practices.
Make sure your renewal submission presents your firm as a professional well-run practice – we all hate forms, but proposals completed in illegible handwriting, with unanswered questions and a lack of supporting detail do not encourage underwriters to regard the firm in a good light.
Make sure your renewal application explains how you address key risk features:
- How do you manage the firm’s finances, and do they show a healthy foundation for the business?
- How do you stay up to date with compliance obligations and manage this effectively?
- Are you sufficiently aware of the risks inherent in the services you provide? How do you monitor these risks and mitigate them?
Supply any independently verification of 1) – 3) above:
- If you use independent compliance consultants it could reinforce the strength of your application. An audit of your firm’s compliance systems can let the insurers ‘look under the hood’ and show them you understand your key risk areas.
- Do your accountants provide support services that help you to demonstrate a sound financial footing? For example, UK200 Group accountancy members provide a profit workshop for law firms to help them improve profitability.
Make sure you agree a timescale for quotations – to ensure you have plenty of time to consider terms carefully or to react to unexpected or adverse changes in premiums or conditions.
Allow extra time for setting up any financing arrangements – as these are taking longer to complete.
Make sure you have Cyber insurance in place and confirm this to PII Insurers – PII Insurers are increasing their focus on this given the rise in attacks on law firms. The PII policy will bear the strain of client account losses, but it won’t meet the costs involved in forensic investigation, regulatory notifications, client safeguarding measures, PR, losses of your own funds, replacing equipment e.g. IT, or business interruption.