Law firms that have yet to secure professional indemnity insurance (PII) face the prospect of missing the 1 October renewal deadline, a leading specialist broker has warned.
Simon Lovat, divisional director for UIB, said his firm had more than 1,000 unsecured law practices on its books.
Many have opted to wait until the last minute to secure the best deal, meaning that insurers and brokers will struggle to cope with the backlog this month, Lovat said.
‘There are real fears that there is not the physical capacity to deal with demand,’ he said. ‘Insurers who would expect to be working weekends in September have found there is not the demand yet. As an insurance profession we’re trying to tell clients that they have to decide now, or else it might not happen at all.’
Lovat said the backlog will be exacerbated by the weekend falling directly before the renewal deadline – leaving many law firms scrambling for insurance next week. He estimated that up to 3,000 law firms could still be waiting to secure PII.
For those that miss the deadline, there is no guarantee that insurers will offer sympathy.
‘In October the supply will constrain dramatically as insurers don’t want to provide insurance for firms that don’t manage their practice well.’
Philip White, chief executive of independent finance provider Syscap, said that high insurance quotes are forcing smaller firms to wait. ‘The recession has driven up the number of claims law firms face, which in turn has pushed up the cost of PII cover,’ he said.
‘On top of this, the PII market remains dominated by just a handful of insurance providers, making affordable cover difficult to secure.
‘PII has become so expensive that even perfectly viable smaller firms are struggling to secure funding for their insurance.’