ntegrity insurance solutions limited

2010 SOLICITORS' PROFESSIONAL INDEMNITY RENEWAL 2010 

WHAT CAN YOU EXPECT?

Significant re-pricing of premiums is planned by most Insurers (but not all) of higher risk segments of the profession, particularly those having involvement with residential conveyancing, trust and probate and personal injury.

• ARP ‘surcharges’ will be levied by some (but not all) Insurers.
• Focus on the financial viability of the firm. Non payment of premiums and excesses is an increasing concern to underwriters given the economic climate.
• Focus on firms with claims record particularly where account is making overall loss.
• Focus on residential conveyancing.
• Insurers limiting multiple broker enquiries.

Travelers have described this renewal as ‘the year of reckoning’. These sentiments are shared by many of the most prominent 'Approved Insurers'.

WILL NEW INSURERS HELP THIS YEAR?

While there may yet be a surprise entrant or two, we believe that new Insurers are less likely this year. Why?

• Uncertainty of how many Quinn insured firms will enter ARP.
• The ARP 2008 performance shows claims of £39m against premiums of £5m (but only £1.8m of this has been able to be collected from firms).
• Insurers not wanting to be exposed to ARP (they must share in proportion to their final primary premium). 

Currently there are 18 ‘Approved Insurers’ available to specialist brokers with 2 further ‘exclusive’ facilities targeting only specific segments of the profession. 

This is down from 23 last year with the withdrawal of Quinn, Hiscox and Catlin.

Circa £30m premium in 2009 terms (representing over 3,000 firms) must find a new Insurer this year.

ARE INSURERS JUST TALKING THE MARKET UP?

No. The majority of Insurers are making underwriting losses but the impact of this will be amplified due to Quinn’s departure.

At the time of writing there are 3 confirmed ‘approved Insurer’ withdrawals so far. However, there may be others if large numbers of Quinn insured firms drop into the ARP.

All Insurers feel that the threshold obligations for approved Insurers are unreasonable and the SRA agree that these are unsustainable.

Current rules make Insurers liable to pay the customer’s claim even if premium or excess is not paid by Firm.

IS ANYTHING BEING DONE WHICH WILL HELP?

Yes.

The SRA review of the entire consumer protection regime should deliver more sustainable and stable framework for Insurance but not in time for this coming renewal.

The review outcomes will be in place in time for the 2011 renewal.

Insurers and brokers have both been invited to engage in this review which is positively regarded in the insurance market.

HOW CAN YOU MITIGATE THE EFFECT OF INSURANCE MARKET FORCES ON YOUR FIRM?

• Prepare early.
• Prepare an electronic renewal submission.
• If you have doubts about your current broker's ability to deliver your needs select one (or two at most) alternative intermediaries.
• Use a broker with knowledge & experience.
• Ensure that the broker you finally choose provides in-house integrated claims service.
• Ask the broker about their remuneration and ensure that you obtain value for money for the services you require.

PREPARE EARLY

Many Insurers will start late this year to dampen the effects of market competition on their book.

You can still be ready when they open for business by preparing an unambiguous clear and full renewal submission.

Some Insurers may close their books early this year as they watch for ‘Quinn drift’ into the ARP. Leaving it late to apply creates a real risk of only a limited range of quotations being available to you (or no terms at all).

Key Insurers are moving to limit time wasting multiple broker submissions this year.

Of the 23 ‘Approved Insurers’ in 2009, 3 are withdrawing and 2 are available only via an exclusive route not targeting all firms. You can obtain market-wide oversight from no more than 3 brokers if selected carefully.

Don’t be fooled into thinking that ‘exclusive’ facilities available only through one intermediary deliver a 'broking' service. ‘Exclusive’ facilities might offer attractive short term pricing but hardly any have proved in the past that they have the ‘staying power’ you need to underwrite a ‘long-tail’ liability insurance. Don’t expect other Insurers to give the ‘exclusive’ intermediaries keen benchmark quotes to pass on to their own commission enhanced scheme.

PREPARE AN ELECTRONIC RENEWAL PROPOSAL

Anything you can do to make your renewal picture easier to read and understand quickly for brokers and underwriters is to be welcomed. It is surprising how many firms pay hardly any attention to this resulting in endless queries and consuming valuable time.

An effective broker will anticipate Insurer queries and resolve these with you before approaching underwriters to save them both time and this is valued by Insurers translating into improved turnaround times.

Remember that this year the Quinn withdrawal means that remaining Insurers will have 3,000 more risks to assess – make yours stand out clearly and positively.

SELECT THE RIGHT BROKER

• Aim for a broker with sound understanding of the Minimum Terms and Conditions. The Law Society has issued advice on choosing a broker here.
• Look for proven knowledge of the profession and track record of the solicitors PII market.
• Ask for examples of solutions delivered to other firms with whom you can speak.
• Investigate how the broker will engage with you on claims once appointed.
• Enquire about the broker’s remuneration approach.

SELECT A BROKER PROVIDING EFFECTIVE CLAIMS SUPPORT

The essential link between claims and the effective understanding and broking of risk is increasingly being discarded by intermediaries. Our experience has proved time and again that breaking this link can be hugely detrimental.

Increasingly we see broker claims support being outsourced and this is usually done for cost cutting reasons rather than service enhancement.

ASK ABOUT BROKER REMUNERATION

Agree a transparent fee based on the work you require from the broker.

Ask the broker if they will earn any profit or performance related additional commissions.

Ask the broker representative if their personal remuneration is related directly to renewal or other commission or fees secured. This is used by some Professional Indemnity intermediaries although it is not commonplace among brokers. Paying bonuses to staff based on maximising the income they can generate from you can be a conflict of interest that is hard to reconcile and the FSA have stated that this can encourage risk-taking and negligence, and increase the risk of bribery and corruption,

WHY CHOOSE NTEGRITY?

• Well known specialists in the Professional Indemnity Insurance market for 30 years.
• Proven knowledge.
• Proven solutions.
• We work for you, not Insurers.
• In-house integrated claims service to help protect you.
• ‘ETHOS’ our own design claims management system that saves you time and money.
• ARP rescue service that works having recovered a number of firms from it in 2009, securing over £2m in premium savings.

Call       0845 638 3273

E Mail    solicitors@ntegrity.co.uk