Professional Indemnity insurance premiums rise significantly for firms
This spring saw firms paying an average third more for their professional indemnity insurance (PII) cover.
The recent 2021 professional PII renewal season meant the legal sector ended up forking out on average 30 per cent more for their cover, according to Lockton Solicitors.
A Law Society spokesperson said:
“We previously warned firms could expect increases of 30% for their PII. Now, it seems it has happened.
“The legal profession is operating in a hard market, but the situation is being made worse for our members by a significant minority of firms producing claims that exceed the premiums raised by insurers.
“This situation is not sustainable, so it is essential that members – and those doing conveyancing work in particular – take steps to review their risk management practices and ensure these are adequate to avoid all but the most improbable claims.
“The Law Society has a range of resources and information to help our members get the best cover for them and will be on hand ahead of the October renewal date.”
On 16 June, the Law Society is hosting a free PII webinar looking at how to maximise the opportunities to find the cover their members need.
In the Law Society’s ‘Conveyancing Update’ published this month they gave advice to conveyancers in relation to PII. It said:
“Whilst you’re under pressure, you still need to consider all the usual aspects of the process.
“Residential conveyancing remains the highest area of claims for most PI insurers with the main areas of concern including:
- ground rent clause disclosure
- complications around multiple dwellings relief from SDLT and other aspects of SDLT reliefs
“Some insurers have been concerned about the sudden increase in workload you’ve been dealing with since the re-opening of the market after the first
“lockdown coupled with the introduction of the SDLT concession.
“Carrying out a high proportion of conveyancing can limit the market who are willing to quote.
“A hard market for PI insurance has made underwriters more risk averse. Fewer are willing to provide cover to firms that do a lot of conveyancing work, and diminished competition means fewer alternatives if you’re hoping to switch insurers to find a better deal.
“Remember that effective communication with clients, good supervision of staff and ongoing training for staff and fee-earners, especially when they are working from home, continues to be key in defending claims.
“It may be helpful for you to make a record of your experiences of working during the pandemic, including details of how you’ve overcome the negative impacts to make your firm more operationally resilient.
“Points to consider might include:
- how are you working now?
- how do you intend to work in the future?
- what has not worked so well, and how have you adapted to overcome issues?
- how are you promoting staff wellbeing?
“Being able to provide a concise note, alongside your proposal form, which evidences the steps you have taken to manage risks, could give you an edge when the time comes to renew your PI policy.
“If your firm has had a significant uptick in the number of transactions (perhaps an increase of 15% or more), this ought to be notified to your insurer.
“Significant changes – such as new partners, or new areas or volumes of work – should be brought to the attention of insurers as they occur. That way, they will not come as a surprise when the time comes to renew your policy.”