Small and medium sized law firms are less inclined than ever to shop around to find the best insurance quote, Law Society research has revealed.
The proportion of firms contacting just one broker for their indemnity insurance renewal in 2016/17 rose to 71%. Just 19% contacted two or three; 2% contacted more.
The extent of ‘shopping around’ appears to have declined significantly in recent years: in 2015/16, 63% of firms contacted one broker, while in 2013/14 only 47% did so.
Firms continue to be happy with the service from their broker, with 92% at least satisfied, but many are unaware what commission is being taken.
More than one-third of firms said the commission figure was simply not disclosed, while in a handful of cases the commission figure was requested but not disclosed. Where commission was disclosed (in 43% of cases), it was most likely to be set at 10-15%.
Meanwhile, almost a quarter of firms have taken out cyberinsurance after a similar proportion said they had been targeted by scammers in the past 12 months. This rose to 42% of firms with at least five partners.
The most common form of attempted scam was through emails, which accounted for 83% of cases. Half of firms took internal action, with 19% contacting the police and 11% contacting the Solicitors Regulation Authority.
The larger the firm, the more likely they were to be targeted by scammers, with 65% of firms of 11-25 partners reporting being a potential victim. Just 28% of firms with up to four partners were targeted in the past year.
One in 10 firms now spend between 10% and 20% of their gross fee income on insurance, although the average cost of premium has remained stable since last year, at 4.8% of income.
The average premium was 1.3% lower this year, but mean premium costs rose for firms with one to four partners.
‘This continued market stability is good news for both clients and the profession, so it’s well worth shopping around for a good deal; surprisingly few firms do at the moment,’ said Law Society president Joe Egan. ‘It is vital firms keep their risk management up to date - particularly in relation to scams - if they wish to continue to benefit from lower PII premiums. Some insurers now ask about the measures firms have taken to protect against scams, including their security and IT systems.'
The survey was conducted by Mustard Research and involved 601 firms ranging in size from sole practitioners to 25 partners.