The Professional Indemnity Market 2021

Recently Tom Lyes, Director of Engagement at Lawyer Checker met with Professional Indemnity Specialist Jenny Screech from Howden Insurance Brokers, about PII ahead of October’s renewals.

Professional Indemnity Market 2021 overview

Recently Tom Lyes, Director of Engagement at Lawyer Checker met with Professional Indemnity Specialist Jenny Screech from Howden Insurance Brokers, about PII ahead of October’s renewals.

You can catch up on the recording here.

Tom and Jenny covered a range of topics that are important for conveyancer’s as they prepare their insurance renewals:

 

  • Market overview March 2021:

Howden Insurance Brokers agree with recent media reports that it is the hardest PI market for over 20 years. In the previous 20 years, there have been only three occasions when the Solicitors Indemnity Fund premiums went over £300m – one of which was in 2019/20. Insurers are concerned about the conveyancing aspect of legal practice based on previous trends and the other points addressed below.

  • Understanding your firm’s risk

The premium calculation a firm receives is generally based on:

  • What areas of law they practice in
  • Their claim history
  • Firm’s gross fees
  • Their type of insurer

To understand the outlook for your firm, it is important to talk early with your insurer to understand the impact of such areas.

Firms are encouraged to speak to their own insurance brokers after the 1st April to start to consider their firm’s insurance proposal form. This form will offer insight into what areas your broker is sensitive to, as well as advising further on your firm’s risk management agenda. Proposal forms are longer than ever before and leaving completion until short notice could be costly.

Brokers are increasingly focused on a firm’s financial position, with a recent report from the SRA citing that 47 firms went into an extended policy period last year. (This is where if your firm’s insurance renewal is not successful, and the firm has 60 days left to practice on current instruction before closure). In September 2020 83 firms closed, some of who’s Professional Indemnity Insurance was not renewed by their broker.

  • Top risks for conveyancers to consider in their renewals
  • New build developments: Firms involved in these transactions are high on an insurers radar. Recently there have been some devastating development failures - in some cases purchasers have lost up to 80% of their funds.
  • Stamp duty extension: Conveyancers are under more pressure than ever due to the Stamp Duty holiday extension. Insurers will have concerns that disappointed buyers might try to claim against their solicitor for when a purchase has failed to complete.
  • Cyber security: On insurance proposal forms, many brokers now ask if firms have separate cyber security insurance. In the 2020 SRA Thematic Review, amongst the 40 firms that took part, 30 had experienced a cyber-attack on their firm. Only 12 of these 40 firms had separate Cyber Insurance. Senior partners are urged to treat cyber security as they would their firm’s finances, with an independent audit. Cyber Essentials Plus is a government accredited scheme that can do just that; through assessing a firm’s security to aid in meeting industry standards.

The fallout of the pandemic is yet to be fully assessed and will factor in Professional Indemnity Insurance for years to come. Investing time from April in preparation of renewal in October is vital to safeguard your firm’s practice.

Speak confidentially with Tom Lyes, Director of Engagement to discuss your firm's needs.

Further reading 

  • Howden solicitors’ PII market report (January 2021)

www.howdengroup.com/uk-en/howden-solicitors-market-report-jan2021

  • Representation and presentation – key to a successful renewal of solicitors’ PII

www.howdengroup.com/uk-en/representation-presentation-solicitors-pii-renewal 

  • The problem with reducing your indemnity limits

www.howdengroup.com/uk-en/tempted-reduce-your-limit-indemnity-save-money-your-professional-indemnity-insurance-beware

  • Beware increasing the self-insured excess

www.howdengroup.com/uk-en/beware-increasing-your-self-insured-excess-save-money-your-professional-indemnity-insurance-pii