Posted by Marc Rowson, senior vice-president at Legal Futures Associate Lockton
April continues to be a popular choice of renewal date for both law firms and insurers alike, and remains the second most common date for a law firm to renew their professional indemnity insurance (PII).
Albeit not as congested as October, the April renewal is as such that it provides a clear indicator of what to expect for those firms renewing later in the year.
With just over five weeks to go, if renewal presentations are not yet complete, I would strongly urge that these are concluded as quickly as possible to ensure you leave plenty of time to explore the marketplace.
Last year saw the beginning of the end of significant rate increases from insurers and as the year progressed – despite rate increases still being felt – the trajectory of such increases were reducing.
The hope and expectation is that this will continue in 2023, and that the renewal process will be less daunting and challenging than it has been in recent years.
At the time of writing, the majority of insurers are now open and actively considering enquiries, and momentum will continue to build in the run-up to 1 April. Our advice is to engage with your representatives as quickly as possible whilst underwriting resource remains at an available capacity.
Whilst speed of delivering the presentation is important, perhaps more crucial is that your presentation is detailed and shows your practice in the most effective manner.
As well as the proposal form, we strongly urge you to provide a narrative on how the business has fared since the last renewal, touching on the highlights, the opportunities you are seeking to take advantage of, and the challenges you face – along with how you are intending to deal with them.
In addition, if you have had claims/notifications, be forthcoming – don’t wait for insurers to ask. It is important to highlight what occurred, how the issues have been addressed and why there are no systemic issues.
Insurers are not always deterred by a particular claim; what acts as a barrier to them is the uncertainty that more claims could follow.
For those firms renewing in the coming weeks, we offer the following thoughts
Timeline management: Robust management of the renewal timeline will ensure that time does not become a feature in negotiations.
Flexibility: Approach renewal with an expectation of changes being required and be prepared to consider alternative options. This will require flexibility in terms of programme structure, insurers utilised and, in some cases, coverage priorities.
Communication: Agree a clear communication plan as part of the renewal process. This should include both formal ‘milestone’ dates, and regular informal discussions with insurers and your broker.
Relationship management: Strong and effective tri-partite relationships assist in achieving the best outcomes in renewal negotiations. Evaluate your current relationship profiles and develop plans to enhance these.
Information: Work with your broker to review how your risk is presented to insurers and have a clear strategy to collect the information insurers require, supported by clear analytics.
Investment: If you have made investments in people, IT, training etc, be sure to bring these to the fore so insurers can identify the positive changes occurring in your business.
For the first time since the pandemic in 2020, there are reasons to be optimistic heading into renewal, and for those firms who commit the time to preparing a quality presentation and choose the right representative(s) to articulate this from them, there is no question that this will present a huge advantage to them once final quotations are delivered.