Solicitors in smaller firms face an increase of 10% or more in professional indemnity insurance premiums this year, according to a leading broker’s analysis of the market.
Conveyancing practices are bearing the brunt of an expensive and chaotic renewal season, the Gazette has been told.
One in four underwriters is refusing to engage with brokers whose client exposure to conveyancing is deemed to be too high. According to analysis from broker Howden Windsor, ‘many mortgage lenders now preclude firms using unrated insurers from their panels’.
Last year, only 5% of firms decided to move from the formerly fixed PII renewal date of 1 October, meaning that most firms yet to secure cover now enter a renewal period when premiums typically jump by 20%.
Howden Windsor director John Wooldridge (pictured) told the Gazette: ‘Premiums, it seems, are reflecting insurers’ recognition of the losses in the property market after the 2008 credit crisis and their reduced appetite for risk.’
A 10% increase, Wooldridge noted, does not factor in any growth in an insured’s fee income. Fee income, the Law Society’s latest PII survey confirms, remains the ‘dominant determinant of the level of PII premiums paid’.
In separate analysis, a leading finance provider to the legal profession, LDF, also predicted that smaller firms face an increase in premiums for 2014/15, against expectations.
A Law Society spokesperson said: ‘Our advice to firms is to shop around if you are not happy with the quote, but more importantly, you must not delay your renewal.
‘Our market intelligence is that, despite reminders to our members, a lot of firms seem to be leaving renewal very late this year. Some brokers are getting nearly 50% fewer proposal forms than they did at the same time last year.’
The spokesperson cautioned: ‘Entering the extended indemnity period is not a commercial choice but a last resort when your firm is faced with closure because of failure to renew insurance.
‘And don’t forget an insurer quote might expire if you leave it until the last week of September, by which time capacity might be scarce.’