Posted by Marc Rowson, senior vice-president at Legal Futures Associate Lockton
At the time of writing, we are a little over 10 weeks from the 1 October professional indemnity insurance (PII) renewal date, the most populated (to describe as popular would be disingenuous!) renewal date for solicitors’ firms.
The process has never been a particular enjoyable time for the vast majority of firms, and none more so than in the previous two years, with volatile market conditions and the backdrop of a pandemic creating both concern and angst for many.
As we head into the forthcoming renewal, the waters seem far calmer and, for some (not all), there may be a return to competition amongst insurers to secure their custom. Our anticipation is that rates will increase, but at a fraction of what has been experienced recently. Insurers all seem to be seeking as smooth and settled a renewal season as possible.
Insurers and the individuals responsible for managing their organisations’ solicitors portfolio continue to navigate their way through a volatile and ever increasing litigious claims environment.
There remains a number of significant losses being dealt with from historic underwriting years and insurers remain at pains to point out that notification trends year-on-year are increasing, albeit a significant crystallisation of those claims is not occurring as yet.
This, coupled with geopolitical tensions and an uncertain domestic economic outlook, are the most concerning factors impacting underwriting strategy ahead of October, almost serving as the proverbial handbrake on welcome rate reduction and new entrants disrupting the current status quo.
Whilst I appreciate that the process of insurance renewal can be incredibly tedious and time consuming, the improving conditions in the marketplace make it more important than ever to ensure a comprehensive and detailed presentation is provided to insurers and in a timely fashion.
These are just a few suggestions to aid renewal negotiations:
- Ensure the proposal form is fully completed and detailed responses provided as supplementary information if so required;
- Provide up-to-date claims summaries – If there are claims of significance, include an appendix to the presentation with a narrative on the matter, the current position and any measures taken to prevent a reoccurrence (departmentally or across the firm). If you haven’t already, request these now to ensure no delay once proposal form is completed;
- Include a covering note on the firm’s letterhead to support the proposal form, as a minimum touching on the following:
- The firm’s trading performance and points of note since last renewal;
- The outlook for the next year and any strategic objectives the firm is looking to execute;
- A brief reference to the client base – has this remained the same or has there been a shift?;
- Any investments made in past 12 months that improve risk controls (e.g recruitment of personnel, IT investment, spend on external experts/training); and
- The firm’s attitude towards IT security and an outline of how you manage ‘IT system risk’.
- Ensure the renewal presentation is with your chosen representative(s) by the start-middle of August; and
- As market conditions may be improving, ascertain whether your current broker is able to undertake an extensive direct marketing exercise on your behalf. If they can’t, be sure to act quickly and either complement or replace with the services of a reputable alternative.
We wish every firm that is renewing in the coming months a positive and successful renewal, and we hope the above guidance is helpful to you.