In recent years, Professional Indemnity Insurance (PII) renewal has been relatively straight forward for most firms. There has been plenty of “A” rated insurer capacity and we have not seen significant movement in premiums. However, we now need to brace ourselves for a more difficult time. Recent events confirm that conditions are changing. This story began with the intervention of Lloyds of London last year. Their thematic review highlighted the poor performance of PII generally and called for remedial action across their syndicates. This has also filtered across to other company markets and as we head towards the 1 April renewal for solicitors, we are definitely seeing signs of change. We have seen some underwriters leave the market and others are warning to expect increased premiums. It is therefore more important than ever that firms get their house in order and pay careful attention to the renewal process.
In addition to understanding the current state of the market with regard to premium, it is important to understand any current issues that are of concern and focus for underwriters. This will assist you to shape your renewal submission and the information you want to present to underwriters. Onerous ground rent clauses in leases continue to be a source of concern as is involvement in the purchase of multiple properties in large developments such as the failed Northern Powerhouse schemes. Cyber related fraud is also high on the agenda and insurers want to be reassured that firms are continuing to pay careful attention to this issue.
We urge firms to ensure that they start the renewal process early. Proposal forms take time to complete and this is not the year to be leaving matters until the 11th hour. We also encourage firms to include a letter or note setting out information highlighting the qualities of your firm that do not emerge from the answers on the proposal form. Be concise – two to three pages is enough. Put yourself in the shoes of your insurer and focus on issues that are likely to make a difference. For example:
- The quality and culture within your firm
- Risk management initiatives within the last twelve months
- Particular specialisms within the firm
- Details regarding higher risk areas of practice that make that work lower risk in your firm
- Whether your business receives valuable assistance from outside support firms such as Symphony Legal.
Strong broker and insurer relationships are key in a hardening market. At Howden we have strong relationships with insurers who are committed to the profession. We have direct access to a wide range of “A” rated Participating Insurers and it is this capability that will assist our clients to mitigate any hard market conditions to keep your PII premium at competitive levels.
If you would like to discuss current market conditions further and understand how we can assist you please do not hesitate to telephone us.
Jenny Screech LLB(Hons) works in the Legal Professions team at Howden UK Group
Tel : 0203 811 0732
Email : Jenny.Screech@howdengroup.com