Law firms are consistently paying too much for professional indemnity insurance (PII), research by broker Wesleyan has found.
In 2012, nearly a third of firms surveyed secured a PII quote from their holding insurer only, while 68% received offers from only one or two providers.
Inertia in respect of PII arrangements also extends to law firms’ attachment to their chosen renewal date. Although firms may in future move their renewal date, avoiding what had been the single date of 1 October, most (67%) intend to retain the traditional date. Just 8% will move renewal dates to coincide with the firm’s financial year-end.
Asked what effect the abolition of the assigned risks pool would have, 13% predicted that prices would fall. Some 44% expected a wider range of pricing, ‘based on a firm’s own merits’. Just 7% expected prices to increase.
Ged Wood, professional indemnity manager at Wesleyan, commented: ‘While the effect of the abolition of ARP is not yet known, it will be more important than ever for firms to be seen to be accepting responsibility for risk and managing it appropriately leading into renewal in 2013.’
In a separate development, A-rated insurer AmTrust Europe has announced it will enter the PII market for four- to 10-partner firms, increasing the size of practices with which it has so far done business.
According to the Law Society’s PII guide for 2012/13, there were 15 insurers in the market for four- to 10-partner firms, of which one, Balva, has since been barred from writing new UK business. Of the remainder, just 11 had a security rating.