For the past few years the media commentary on professional indemnity insurance (PII) for solicitors has often been supported by imagery of approaching storms and floating mines when discussing the issue of unrated insurers. For many of those that renewed on the 1st October 2014, however, the experience has been somewhat better than expected.
Out of a recent survey of 600 law firm managing partners by law firm O’Connors LLP, 47% of respondents stated that their renewal premium went down, half of those by a significant amount, whilst 29% saw a slight increase and only 10% saw a large hike. The slight increases were stated to be due to increases in fee income rather than hardening of rates.
Meanwhile, 11% of respondents said they were able to move away from unrated insurers to A-rated insurers at the same premium. The report also stated that Willis advised more firms than any other individual broker (17.5%).
After reviewing those firms that Willis assisted for the first time, it was clear that many brokers approach the renewal process in different ways. From our reviews there were often insurers that could have been a more appropriate fit or a structural option that better suited the firm.
Professional indemnity insurance will always be a significant overhead for law firms, and with an increasing number of firms now renewing in March/April, it is important that they benchmark their risk profile and insurance against similar firms, thereby ensuring they obtain the benefit of any opportunities that are available.
It hasn’t been all plain sailing for those renewing on the 1st October 2014. As stated above, 10% of respondents saw a significant increase and for some this was unexpected. There are a number of insurers that have paid and/or reserved considerable sums against the claims that have come from the recession, and they are looking to recover these losses through increased rates.
Guest blogger Colin Taylor is Executive Director of Willis FINEX Global. Colin has over 24 years’ experience in the PII
market and has for some time focused on the risk management requirements for larger law firms. He holds the International Certificate in Risk Management qualification (CIRM) from the Institute of Risk Management