The Law Society Survey into last year’s Professional Indemnity Insurance renewals has been reported on. It reveals some interesting results that all solicitors should consider.
Despite all the reports about issues for firms 4 out of 5 appeared to have “no difficulty” in renewing their PI, however 3 out of 5 indicated that premium prices had increased by 33% with the median average rising from £12,500 to £16,666. Since then Quinn who insures over 2500 firms has gone into administration and its future remains unclear. The impact of Locktons coming in with Hanover appears to have resulted in a much easier ride for solicitors than may otherwise have been the case.
Of the firms expressing difficulty with the process the main difficulty was being given little time to consider quotes.
14% of firms reduced their premium. Of these many had changed their insurer.
Whilst 33% of firms submitted their proposal form in July, 36% made their application in August and 25% in September. The report indicates that this late submission was skewed towards sole practitioners and small practices. It is surprising that so many firms left their applications to the last moment knowing that it was a peak volume time for insurers and brokers. One unnamed large specialist broker said that many firms have no idea of the impact of late and poorly completed proposal forms and they should seek more advice from their brokers.
86% of 5-25 partner firms used the same insurance company whilst the figure for small firms was lower. Interestingly the summary of the report does not make it clear whether solicitors changed their brokers or continued to use the broker they had previously used.
68% of firms were notified of insurers’ interest in carrying their risk in September but 8% did not receive their indication until after then renewal date. Given the large proportion of firms making their application in September this figure appears very low.
7% of firms received no offer of insurance.
Variation analysis of the price of cover against the size of firm indicates that the key factors in determining premium include:-
– Number of solicitors in the firm
– Gross income in the last 12 months
– Whether their can been any recent claims
– A decrease in the number of fee earners.
There are a number of factors that firms can learn from this survey:-
– Set up a process to manage and handle the renewal
– As Quinn has left the market and there is little indication of other providers entering this market budget for a significant increase in your renewal this year.
– Use your broker early to put your firms risk in the most appropriate light in the proposal form
– Make your application early.
– Prepare for the fact that you will receive your quote very late in the day and that your decision makers will need to be available and briefed to make a quick decision.
– Consider restructuring your practice to make you appeal more to insurers.
If you need more information or want help managing risk within your firm please contact us.