Experts predict 10% PII increase for smaller firms

Experts predict 10% PII increase for smaller firms

It’s been reported that leading broker, Howden Windsor have foreseen an estimated 10% increase in Professional Indemnity Insurance (PII) premiums this year for smaller law firms, following their recent analysis of the industry.

According to the analysis, conveyancing practices are said to be the hardest hit, following the 2014/15 renewal season. In addition, 1 in 4 underwriters are now refusing business with brokers who have clients working closely with conveyancers.

Last year’s renewal season saw just 5% of firms move from the formal renewal date of 1st October. This means the majority of firms who have yet to secure cover have now hit a period when premiums tend to inflate by 20% as a result of the end of year rush.

Changes in 2013/14 also saw the abolition of the No Assigned Risk Pool (ARP), meaning there is no longer a safety net for firms at risk. For failures in PII renewal, it is now up to the last qualified insurer to uphold responsibility in an extended policy period (EPP) of 90 days. If firms are still yet to renew their policy after this period, they will be ordered to close.

A recent PII survey conducted by the Law Society confirms the main way to determine an appropriate level of PII to be paid is the fee income of the insured. John Wooldridge, director at Howden Windsor does stress that the 10% increase prediction does not take this factor into consideration.

The key piece of advice to take according to the Law Society is to not delay your policy renewal and shop around for the best quote. Leaving action until the last minute could see competitive rates diminish, leaving your business vulnerable. The EPP should also be seen as a last resort, not as part of a commercial strategy.

For more information on the 2014/15 PII renewal period, visit the SRA website.

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