Sun, sand, sea. The holiday season begins. Whilst many are preparing for their summer holidays, others are focusing on the professional indemnity insurance market. Firms are preparing their proposal forms ready to kick start negotiations for their PII terms more than 3 months ahead of the renewal date.
Is it any wonder that firms are taking a far more proactive approach to their insurance renewals this year? Some firms battled to secure insurance last year whilst others paid extortionate premiums to continue practicing, in a market where they are being forced to be competitive on price whilst servicing increasingly demanding clients.
But securing insurance is only part of the battle. The rating (or lack of rating) of insurance will need to be considered by firms as well.; Whilst membership to the Conveyancing Quality Scheme opens a number of doors to lender panel status, a growing number of Lenders require PII to be placed with a “rated Insurer”, such as AM Trust Europe Limited, Axis Specialist Europe, QBE Insurance (Europe) Limited and Zurich amongst many others as a prerequisite to being on their panel.
Those who do not have rated insurance are seeing their panel applications rejected or revoked. Earlier this year, Norwich and Peterborough Building society and Yorkshire Building Society were amongst a number of Lenders who changed their panel requirements, which reduced their conveyancing panel considerably.
Firms are being encouraged to take comfort in on-going discussions between the Law Society, Lenders and Insurance market, but in reality whilst debates ensue, firms are having to consider the impact from loss of panel work, and meeting financial commitments. It really is crucial for firms to evaluate the benefits and costs associated with rated/unrated insurance and the effect it has on panel status before finalising their PI Insurance for the year ahead.
Where separate representation of lenders/buyers is the only remaining option for firms to maintain relationships with individual clients, property departments should ensure that they are fully acquainted with Part 3 of the CML Handbook. A growing number of lenders are requesting copies of files as part of an on-going review/audit. Where Part 3 of the CML Handbook has not been strictly complied with, firms are at high risk of panel removal which may also have a knock on effect to CQS membership which in turn closes further doors for other Lenders as well.
Given the far reaching risks involved with PII renewal it is encouraging to see that more firms are preparing well in advance so that they can ensure all of their policies, procedures and documentation have been reviewed and are up to date leaving ample time to negotiate insurance terms and figures with their brokers.
Priya Anand Patel, Director, Legal Eye