As I sit on the train writing this it’s Thursday 26th of September and thankfully we have managed to find an insurer for all of our solicitors this year. You might think this would be a foregone conclusion and under normal circumstances I would agree.
The last common renewal date might well have been the most volatile to date.
As a company we have been dealing with Solicitors PII since the abolition of the Solicitors Indemnity Fund in 2001 and I don’t think any of us have quite seen a renewal season like it. There have been volatile years in the past, but I’m not sure there have been quite so many practices at risk of not being able to find an insurer as this year.
What with the farce of practices accepting renewal with Berliner, only for this to be rescinded about a month before renewal, and XL one of the market leaders effectively reducing their book of business by around 90%, this has drastically reduced capacity available to the market. The market for rated insurers effectively closed to new business a fortnight before renewal date.
So will the unrated insurers out there have enough hours left in their remaining days to take on the number of firms out there without insurance? It seems unlikely to me that this will be the case, thankfully with the Extended Renewal Period these firms will have some time to place cover.
Clearly the Law Society would like to outlaw the unrated insurers and I can’t say I disagree with their stance. When the dust settles on this renewal period it will be interesting to see how many firms there are using these insurers – it’s bound to be a record number – and how the Law Society proposes to solve this issue.
Now whilst this year has been a complete bun fight, it’s fair to say that those practices with good risk management and a clear strategy of how to deal with renewal have actually fared quite well.
In my view the main learning points from this year have been: –
- Choose your insurer carefully – if an insurers premium is out of step with the rest of the market there’s a reason. Ask yourself, why is that? Are they buying up market share or are they a lower quality insurer? If they are buying up market share, how quickly will their strategy change when they suffer the inevitable losses?
- Tackle renewal as early as possible – the back stop date for completion of your proposal form should be 31st July. If your insurer hasn’t sent you a proposal form by then, why is that and what position will you be in if you wait?
- Risk Management – remember compliance isn’t risk management! Perhaps it’s preaching to the choir, but those with the best claims experience will pay the lowest premiums for their demographic. How are you managing your risk?
- Take some advice – though the majority of practices buy PII cover through some kind of broker, capacity for so many insurers is tied to a few national brokers. Is your broker giving you advice on the market and how to tackle it, are they acting as the underwriter or just giving you a quote?
Give it a couple of months and when the dust has settled we will eventually learn what’s really happened in these last few weeks.It will be interesting to see how the Law Society propose to improve matters for next year, if it’s at all possible to do so.
Watch this space for future market commentary and our announcement of how we aim to help clients with Risk Management.
By Sam Leeder