Solicitors' Professional Indemnity insurance renewal in 2009 to be the most challenging for years (April 2009)
Solicitors Journal in March commented that negligence claims against solicitors heard in the Chancery Division of the High Court more than doubled last year. Most negligence claims never make it to court yet still involve substantial expense for solicitors.
At times of economic decline negligence claims tend to increase as those aggrieved seek to place blame for losses on advisers. We are already seeing an increase in the number of possible claims notifications and some alarming quantum.
So how will this year's professional indemnity renewal be affected by the claims horizon and volatility in financial markets?
We expect the 1 October 2009 renewal to be the most challenging for many years.
New Insurer capacity
New insurer capacity is entering the market this year and this will help ensure that incumbent insurers continue to offer keen terms.
Balancing against this, currently committed Insurers can no longer rely on investment income to save them from shortfalls in the premium they collect over claims payments. Most insurers who have been in the game for some years have a claims record which is pressuring them into seeking rate increases.
Renewal quotations are still months away but rate increases of 10-15% are being signposted by Insurers. It could be much more for some. This is unlikely to be welcome news at a time when practice fee income is already facing growing pressure.
Hard market dead ahead!
Market commentators mostly agree that we are headed towards a ‘hard' insurance market but what does this change entail?
Apart from the pain of increases in premium, insurers also tend to:-
(i) Restrict cover offered, (of little benefit with the Law Society controlled minimum terms),
(ii) Reduce the limits of indemnity they offer,
(iii) Increase excesses,
(iv) Adopt a tougher attitude on claims which can result in delayed claim payments, a slowed handling process and perhaps raising more objections when claims are presented.
Here are some of the steps you can take to protect your firm against a more testing insurance market:-
1 SHOW HOW YOUR FIRM IS DIFFERENT - make sure your proposal shows your firm and its risk management in the best possible light,
2 ENGAGE A BROKER WITH KNOWLEDGE & UNDERSTANDING of your profession and your firm to ensure it is presented to potential Insurers to best effect,
3 AVOID FLOODING THE MARKET WITH PROPOSAL THROUGH ENGAGING SEVERAL BROKERS - it is counterproductive when all firms are vying for renewal attention at the same time,
4 REVIEW YOUR PRACTICE RISK MANAGEMENT APPROACH,
5 MAKE SURE YOU CHOOSE A BROKER WITH IN-HOUSE CLAIMS EXPERTISE TO SUPPORT YOU ON CLAIMS. Claims disputes are increasing and many brokers are removing themselves from this vital service element.
NEGRITY will be providing solicitors with tailored professional indemnity facilities in 2009 delivering:-
REDUCED COSTS (not just premium recognizing the many other expenses that arise in connection with a professional indemnity policy),
PROGRAMMES ADAPTABLE TO THE NEEDS OF GROWING FIRMS,
VALUABLE ADDITIONAL COVER RECOGNIZING COMMITMENT TO PRACTICE QUALITY,
PERSONALISED RENEWAL SERVICE,
MARKET RECOGNIZED CLAIMS SUPPORT THAT REPRESENTS YOUR PRACTICE (not insurers).
For more information contact Gary Horswell or Ian Richards on 0845 638 3273