After having been relatively stable for some years, 2019 has seen a hardening of the market for solicitors’ professional indemnity insurance (PII). This was expected in the wake of the thematic review that was published by Lloyds in July 2018, highlighting that PII was one of their worst performing lines of business. Company markets had also experienced poor performance on their PII books and the scene was therefore set for change.
While most law firms have experienced rate increases on the primary (compulsory) £2m or £3m limit in 2019, the level of this has varied depending on the insurer, the areas of practice undertaken by the firm and its claims history. The renewal date has also had some impact, with insurers generally seeking a greater rate increase as the year has progressed. At the present time it is expected that market conditions will continue to get harder into next year.
While there are still a good number of “A” rated insurers in the solicitors’ PII market, we have seen the departure of Managing General Agents, Omnyy and Maven this year. The general appetite for new business was not as keen as it has been historically either. In particular we saw restrictions on the level of conveyancing work that insurers were prepared to consider for new business cases. For some insurers this was no higher than 35% and at least one insurer was not prepared to consider new business that undertook any conveyancing work at all.
The excess layer (often known as top-up) market has also been under pressure. In recent years more claims have been hitting these layers. As a result premiums have increased significantly and capacity has reduced. Law firms also need to take care with the wording of excess layer cover, as it does not always follow the primary wording.
We advise firms to remain closely engaged with their broker in order to stay informed. Your broker should be able to keep you updated on developments in the market, advise you of your insurer’s expectations in terms of rate and work with you to plan the best strategy for renewal. A key component of your strategy must be to get your renewal submission-ready well in advance of your renewal date.
For a more in-depth analysis of the PII market and associated issues important to the legal profession, please make sure you get a copy of our next Market Report, due out in January. Please contact Neil if you would like to reserve a copy.
Neil Pointon is an Associate Director at Howden UK Group Limited
Tel: 020 7133 1346