When not in lockdown, most Solicitors and Insurance Underwriters are office-based. As such, they are unfamiliar with the challenges presented by remote working on a laptop or in a confined space that they probably share with their partner and children.
As a broker, it's been even more important for us that we are a strong link between law firms and their insurers. We've been processing our Solicitor client renewals and new quotations without difficulty because our IT systems and those of the relevant insurers have performed well. It's also helped that we have very good relationships with our clients and insurers and we have been able to provide both parties with the necessary information, answer questions and provide quotations in a timely and efficient manner.
The market is hardening
You are probably aware that premiums for Solicitors professional indemnity insurance have been creeping up. This market trend has continued unabated and many of those firms renewing this year have already had to accept further increases.
Fortunately there are still plenty of A-rated insurers with capacity to give solicitors the cover they need. Their appetite to do so, however, has waned somewhat and is more restricted than we have seen historically.
Conveyancing in particular is an area where insurers are keen to control their exposure. For instance, when it comes to new quotations, many insurers are demanding that conveyancing work does not exceed a limited threshold. This has proved to be a challenge for firms with a significant conveyancing practice – many have struggled to source alternative quotes they can put alongside the renewal terms they received from their current insurer. We’ve been able to help many solicitors in this position because we have access to, and good relationships with a range of A-rated insurers.
Premiums for excess layer insurance that have renewed so far this year have also seen an increase. This is partly the result of restricted capacity as some insurers have withdrawn from this sector over the last 18 months. Available options are now quite limited but that said, excess layer cover still represents good value for money and is not something that should be overlooked.
Winter is coming…
October 1st is still the date on which many law firms renew their PII policies. It is reasonable to assume, given the trends we’ve just noted, that premiums will continue their upwards trajectory. What is less predictable, however, is the effect that Covid-19 is likely to have on rates. Insurers are still assessing the increased level of risk that the virus introduces to their calculations. Remote working makes supervision more awkward and poses challenges around the issue of confidentiality. It also makes some deals harder to complete and when things don’t go as hoped clients look for someone to blame – solicitors being an easy target. It is likely that this will cause increased claims activity which is sure to impact rating models and premiums.
We may also see a reduction in the availability of traditional financing arrangements relating to PII premiums and practising certificate renewal fees. It is also possible that insurers will increasingly demand guarantees or security over personal assets when negotiating such arrangements. With this in mind we suggest that firms start to consider their financing options earlier rather than later.
Be prepared: Countdown to October 1st renewals....
If your cover renews October 1st or even earlier, then we have a few suggestions that should help you avoid any nasty last minute surprises.
- Talk to your broker in plenty of time so you can get a good idea of what to expect from your insurer given the profile of your particular firm
- Work out a timeline with your broker for submission of your proposal form. Then provide appropriate deadlines for colleagues responsible for providing the necessary information
- Take time and care when preparing your proposal form and accompanying documentation – you need to present your firm, and its risks, in the best possible light. This can have a significant bearing on your premiums
- Take advice from your broker and adjust your PII budget expectations accordingly
- Prepare to consider all available finance options. Given the financial pressures created by COVID-19 it is likely than an increased number of firms will be looking to finance their premiums. Increased demand may mean that obtaining finance becomes more problematic. We suggest you give yourself plenty of time to explore available options and find the best deal.
We’re here to help
We arrange PII insurance for many solicitor firms across the UK, as well as other professions and industries, so we are very well placed to help you in these challenging times. If you’d like guidance, further information or a quotation, please contact us now.