PII: More policies longer than a year bought
The proportion of law firms switching insurer for lower premiums at last year’s October renewal rose significantly with capacity “much more plentiful”, with good signs for this year too, research has indicated.
A quarter of firms found new cover last year, up from 16% in 2023 and only 6% the year before that.
The increased capacity – “markedly more” than just six months earlier – led to greater competition, according to broker Howden.
“We reported in our last review for the 1 April 2024 renewal that several insurers were starting to relax restrictions on traditionally higher-risk areas of practice and this increased yet further, particularly regarding the percentage of conveyancing and personal injury work undertaken as a proportion of a firm’s overall gross fees.”
Among firms in Howden’s book, 1 October remained the most popular renewal date at just over 40%, down on 44% from the year before, while 1 April, the second most popular, was up from 31% to 33%.
“This is mainly due to more firms opting for 18-month policies in the increasingly favourable market conditions,” the report said.
“Rate reductions were generally the order of the day across our book of business, provided firms had not suffered any significant claims activity or deterioration in claims experience.
“We did see some brokers reporting double-digit rate reductions across their entire book; however, this should be taken with a pinch of salt.”
However, more than 70% of firms achieved rate decreases for October 2024, well up on the figures for six months before.
“Longer-term policies were widely available from the vast majority of insurers; these having almost completely disappeared during the hard market, although they had started to come back from October 2023.”
The proportion of law firms renewing with policy periods longer than 12 months doubled to 18%.
However, law firms wanting to access premium financing faced a very different market: “Firms found it more difficult to obtain financing for their insurance premiums, with credit providers asking for more information and applying more stringent criteria than in previous years and taking much longer to make decisions.”
Turning to this year’s markets, researchers said they expected capacity “to remain in strong supply for 2025”. No insurers were expected to exit the market and a new one, Fortegra, was granted its licence to write business directly in the UK after a “significant” delay.
“Our current expectations are that the increase in appetite will continue to lead to greater competition between insurers keen to win new business and retain the well-performing firms on their books.
“The percentage of firms moving insurers is on the increase and this may well continue on an upward trajectory throughout 2025.”
For law firms needing primary cover of £2m-£3m, the “cautious prediction at this stage is a continuation of rate reductions throughout 2025, but with a slowing down towards the end of the year”.
Researchers said they had detected a “small increase” in the uptake of separate cyber insurance policies by law firms in 2024 “and we anticipate (and hope) that this will continue in 2025”.
They added: “Given the year-on-year increases in cybercriminals targeting law firms, we encourage all firms that can afford to purchase a cyber insurance policy to do so.”
Michael Blüthner Speight, a solicitor and divisional director of Howden’s legal practices group, commented: “For firms that renewed their insurance on 1 October last year, it will likely have been a much less stressful experience than in recent years.
“There was increased capacity and appetite pretty much across the board from insurers, and it was clear that both brokers and insurers were very keen to win new business at every opportunity.”
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