Brian Boehmer, partner at Lockton Companies LLP
The removal of the common renewal date means insurance underwriters are now no longer faced with the prospect of reviewing up to 10,000 submissions over a few weeks, but they still receive a large number of enquiries. So it is important to ensure that your presentation stands out.
Take the time to prepare a detailed presentation, beyond just providing a proposal form. A form generally provides insurers with the hard facts about your practice, but not the softer facts which ultimately give a more rounded view of who you are. These softer facts could include: a brief history of your firm, how you got where you are today, and the awards and accreditations that the firm or team members have achieved. It could also include the structure of your practice, the firm’s ethos and culture, and a brief explanation of your office environment.
The softer facts can often have a positive impact on the end terms that your broker negotiates on your behalf – but keep things brief. As Churchill said: ‘The length of this document defends it well against the risk of it being read,’ so including your staff manual is unnecessary.
If you have experienced claims, these will be shown on your insurer claims summaries. It is important you address these, articulating what happened, the measures you have implemented to prevent a recurrence, and the reasoning behind them. Simply advising insurers that the individual responsible no longer works at the practice will not be sufficient. If you have a clean claims history, provide insurers with some information about how you have achieved this, and what risk management procedures you adopt to mitigate risk.
Lastly, consider carefully who you appoint as your broker. Check their experience in this specialist class and ask them which insurers they have direct access to, which can be incredibly important should you experience claims. Any additional links in a chain between you and the insurer could slow the speed of resolution.
Patrick Bullen-Smith, Hera Indemnity
This year’s solicitors professional indemnity renewal promises to be another roller-coaster for firms as some insurers are looking to increase rates while others are hungry to write new business.
Solicitors professional indemnity insurance is expensive so time and thought must go into the submission. The proposal form sent to brokers is vital, as for most firms this is the only direct interaction they will have with the insurer. Obviously, all the questions should be completed fully with any supplementary information included, either on the form or with an explanatory email included with the submission. Insurers will generally look at previous proposal forms and will check that the information is in keeping with the most recent submission. Equally, some insurers will review the firm`s website, so there needs to be a consistency of information.
A golden rule. Solicitors cannot give too much information to the insurer and a comprehensive well-thought-out submission will really help differentiate one solicitor’s practice from another.
Insurers will always need to see up to six years’ previous claims experience and it is therefore imperative that summaries are checked and that any ‘open’ claims that can be/ or should be closed are indeed closed. A broker should be able to do this for you, but firms should always check that this has happened as it could make a big difference to any quotations offered.
If a firm has had a large claim then it should be highlighting the reasons why this happened and what risk management procedures have been put in place to stop this reoccurring. The claim should be explained in detail, outlining what lessons have been learned and what positive measures have been undertaken which will greatly reduce the chance of it ever happening again. This will reflect well on the firm as it saves insurers time requesting more information. As insurers are so busy in the summer months they may simply decline to offer terms if the information is not readily available.
Once the submission has been completed and checked the next major decision is where to send the proposal form. Solicitors are inundated with calls/emails from brokers offering all sorts of benefits, but access to the correct market is vital in securing the best possible premium. Some insurers put a strict limit on the amount of conveyancing work they will accept, while others differentiate on partner size. It is essential that solicitors check with the broker they are considering sending their proposal form to that they have access to the widest range of insurers and what criteria those insurers have.
In short, a solicitor must make sure that their submission is seen by the most relevant insurer for their practice.
Finally, it is important that brokers being considered by legal firms are aware of the possible changes to the SRA’s minimum terms and conditions, and the affect this may have on legal practices in the future, including potential run-off changes.
Martin Ellis, Senior Partner and Head of UK Professions at JLT Specialty, commented:
We would, of course, be welcoming of change that is for the benefit of law firms, the profession as a whole and consumers of legal services. However, there are risks inherent in the SRA’s proposals which may have unintended consequences.
Fundamentally, we believe that the proposed changes to the PII minimum terms will not provide an appropriate level of cover for SRA regulated law firms. Further, the proposed reduction in the minimum limit to £500,000 - £1,000,000 for conveyancing work - presents additional risk to the users of legal services and may in fact increase the complexity of the renewal process and potentially increase the cost to the vast majority of law firms.
“In its consultation, the SRA assumes that reductions in premiums will lead to lower costs of legal services, making them more affordable for disadvantaged members of society, but there are flaws in this argument.
The SRA state that the average rate on fees that firms pay for their PII is 5%, thus if premiums are reduced by 10% then the saving is 50p in every £100 of fee income. Even if this is passed on in full to consumers it will hardly make any difference to the affordability of legal services. Whether this insignificant reduction is worth the additional risks to both the industry and consumers is certainly questionable.
Zarina Lawley, Head of Solicitors at Miller
On a primary basis we believe underwriters will be looking to hold rate and not aggressively competing for new business.
Early renewal deals and 18 months policies are still readily available. However, we have noticed that the parameters of such deals have become slightly more restrictive.
We think it is also true to say that excess layer capacity is beginning the process of correcting itself and we anticipate modest increase in line with fees.
We do not think that there will be any material new entrant or withdrawal or correction from insurers in the market.
We do not think two year deals will be available from established market players provided premium terms are level - the 18 month policies should be seriously considered.
It is important especially with the SRA proposals in mind to ensure the primary and excess layers policies have no gaps in coverage.
Charles Hawtin, Head of Client Service at Chancery PII
Our view on proposed SRA terms is that they will have nil impact in attracting new insurers to the market and we find it hard to believe that they will result in any meaningful premium reductions.
If anything, we believe that there is a real risk that not only will the proposals create a two-tier market, but will ultimately result in greater cost for insureds.
Whilst we do not agree with the sentiment and justification for amending the terms from an underwriting basis, the proposals will reduce maximum exposure to larger claims and run-off.
However, due to the nature of business, underlining claims experience will remain the same and therefore not result in a reduction in rating.