By Legal Futures Associate Recovery First
Renewing Professional Indemnity Insurance (PII) over the last few years has become increasingly taxing for solicitors, with rising premiums from the hard market conditions that have extended across all professional sectors, not just law firms. In addition, we have seen some insurers withdrawing or reducing appetite from some areas of law.
The strict terms and conditions imposed by the Solicitors Regulation Authority (SRA) have made Professional Indemnity Insurance (PII) less profitable for insurers, discouraging new providers from entering the market. However, for the first time since the pandemic in 2020 there are reasons to be optimistic heading into the forthcoming renewal season. We are aware of a new insurer coming in; the first for a number of years, however we suspect their appetite will be limited to certain types and sizes of firms and will not be a one size fits all solution.
However, the current economic downturn and slowing trajectory of the housing market will mean Insurers will be mindful of taking on new risks where firms are highly active in the Conveyancing sector as well as Landlord and Tennant.
We also have the ever-evolving threat of cyber-attacks on firms for their confidential data and in particular theft from the client account, where the latter has to be insured by Underwriters in accordance with the Strict Minimum terms and conditions of their wording.
Preparing for PII renewal
To ensure a smooth renewal process, solicitors are advised to take proactive measures. The Law Society recommends early organisation and submission of applications to PII insurers. Timeline management and selecting the right broker is of utmost importance. Unfortunately, many solicitors delay their presentations until the last few weeks leading up to renewal or miss the deadline entirely. Such delays could result in firms being placed in the extended indemnity period, which although grants more time, also triggers punitive measures that must be reported to the Solicitors Regulation Authority (SRA).
Consequences of failing to renew PII insurance
Solicitors who are unable to renew their insurance face operating within the SRA extended policy period and cessation period. The extended policy period provides an additional 30 days of coverage, allowing firms more time to secure insurance. However, if coverage cannot be obtained within this period, the cessation period commences, giving 60 days for firms to plan a controlled closure, merge with another firm, or be acquired, during which time no new matters can be opened.
How Recovery First can assist
Recovery First offers valuable assistance to law firms grappling with the consequences of PII renewal challenges. We provide support for firms seeking to exit specific legal areas or struggling to obtain adequate coverage. Whether firms choose to exit high-risk markets, restructure their business, or plan an orderly closure, Recovery First facilitates the process.
Our experienced team ensures seamless file transfers to approved law firms, safeguarding the integrity of clients’ cases.
Whatever the reason, Recovery First will ensure the most positive and profitable outcome is achieved. An additional benefit being that the firm’s clients not only get a seamless transfer, but they are also matched with firms specialising in their particular areas of law. The unique scheme offered by Recovery First is suitable for law firms and professional advisors, including restructuring and insolvency solicitors, insolvency practitioners and accountants. Our team manage the transfer of files from start to finish, placing case files with an approved law firm to protect the integrity of the client’s case.
We will provide you with all the advice and support you need, and we guarantee 100% confidentiality for all clients. If you would like to find out more about Recovery First’s process, feel free to get in touch today with David Johnstone at firstname.lastname@example.org or 07887796989, or contact Sally Dunscombe at email@example.com or 07774 205 870.