The evolving landscape of Professional Indemnity Insurance

www.bbolawsoc.org.uk Navigating the advertorial evolving landscape C i of Professional Indemnity Insurance P hila nth ro pically mi nded clie nts may be able to do mo re fo r thei r comm unity tha n they T o navi gate the challe nges o f a ha rde ning insura nce ma rket , law firms sho uld now sta rt prio ritisi ng the prepa ratio n o f a hi gh-quality Pro fessio nal Indem nity greater level of caution when they review enquiries in the forthcoming renewal season. Peer reviews will be conducted as standard, certainly when insurers are assessing new enquiries and regardless presentation earlier than in previous years. We recommend having your presentation prepared at least two months in advance of your renewal date as the process will generally take longer. Every cliInsura nce (PII) submissio n ahead o f of the size of a practice and the proposed the comi ng renewal period . premium to be charged. More questions, 2. Prepare a quality presentation for including those related to Covid-19, will insurers’ consideration – this will help The insurance market has been awash with be posed and responses will therefore you stand out from the crowd. Make sure capital, leading to increased competition need to be reviewed by at least one other all the questions in the proposal form are for business and a subsequent suppression underwriter. This means the process of sufficiently answered. Time will be limited of the rates insurers could charge. This has obtaining terms may take longer, especially so expect insurers to make a quick decision resulted in unsustainably low premiums considering most insurers will be working and potentially not offer any terms if your compared to the claim payments being remotely. presentation is missing key information or made by insurers, but sadly times are if it is poorly presented. changing. Some insurers have already released early question sets relating to Covid-19, while 3. Select your representative carefully and Claims activity has been the main catalyst others are developing supplementary do not approach multiple agents as you for the significantly changing market questionnaires. We expect all of these to will actually be doing your professional conditions that we are experiencing. While focus on three key areas: People, Finances peers – and yourself - a disservice. frequency of claims has remained fairly and Risk, some of which will naturally consistent, severity of claims (the total interlink. You may wish to consider the following value of losses experienced) has reached key elements when selecting your unprecedented levels. Navigating the challenges representative: coverage as practices are protected by the • What is their market reach - which insurers We believe that the recent spring renewal Although the insurance market has can the broker access DIRECTLY for period showed us what to expect going adapted well to the ‘new normal’, some you? Speaking directly to an insurer will into August and September. Analysis of things are naturally taking a little longer help speed up the process and means insight and trends from Lockton’s portfolio than they would have done previously. your key message does not get diluted or indicates increased premiums within all As mentioned, a combination of the misinterpreted. layers but especially the working layer hardening market, increased peer reviews • What is the experience and size of their team? (the excess layer above your compulsory and greater caution from underwriters has • What is the extent of their service Insurance limit) where there is a lack made it more difficult to obtain insurance proposition? of insurer options. With many primary terms. This means those firms that are • What is their claims infrastructure? While no insurers reluctant to offer long-term policy traditionally ‘last minute shoppers’ and one wants to have claims, you should know periods and those that did offer extended which provide minimum information to if your representative has the resources to policies tended to apply an increase for the insurers should not be surprised if they fall support you when needed. additional periods. into the Extended Policy Period. It is important to highlight, that the The insurance market is still active, but ensure you establish an action plan with Insurance market conditions were it is becoming much more selective. your broker which covers who they will be hardening well before the Covid-19 Underwriters cannot return a profit for approaching directly and the anticipated outbreak. We believe this process is now their organisation if they do not write timeline for responses. likely to accelerate due to the pandemic, any business, but they will need greater leading to a further hardening market. convincing and will want to align their To find out how Lockton can assist you company’s capital with well-run firms. At with your forthcoming renewal, please do While the sourcing of coverage may Lockton, it is our job to provide them with contact me or one of the Lockton Solicitors become more difficult for law firms, the the reasons to do so, but legal practices team. We would be delighted to hear from legal profession in England and Wales cannot be blasé and we encourage them to you. is fortunately not experiencing reduced approach renewal in the right way. Once you have selected your representative, Solicitors Regulation Authority’s Minimum We believe taking these three key steps Terms and Conditions wording. will help practices navigate the challenges Brian Boehmer ahead: Partner What to expect in the coming months 1. Start early – While we would expect Tel: 0781 401 4655 insurers to prioritise their existing clients, E: brian.boehmer@uk.lockton.com We expect underwriters to adopt an even it is still important that you prepare your www.locktonsolicitors.co.uk

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