PII Market Snapshot

The professional indemnity insurance market has shown improvement, but higher-risk practices still face challenges. Firms that produce a quality presentation and clearly articulate what sets them apart are viewed more favourably by insurers, says Brian Boehmer, partner at Lockton.

It has been a busy time of year at Lockton, with more than 50% of the legal practices in England and Wales that we represent renewing their professional indemnity insurance on 1 October with a number of additional practices seeking alternative coverage through us too.

The PII market has been showing some significant signs of improvement. With most insurers having an increased appetite for new business along with some new capacity entering the market, things have improved significantly for some. However, these conditions are sadly not universal.

Pockets of the legal profession t are still experiencing challenging PI Insurance market conditions, particularly practices with significant property exposure or other higher-risk practice areas with a modest fee income. In part, this is due to economic uncertainty. With the looming fear of a recession, which typically results in increased claim volumes, coupled with the fact that most insureds within each insurer’s portfolios have engaged in more conveyance work over the past 36 months, insurers are treading incredibly carefully. In respect to new business appetites, most insurers have imposed a ceiling/cap on the percentage of property work that they will consider which naturally reduces choice. Leading insurers openly seek to reduce property exposure and non-renew risks.

Having cyber insurance was imperative again for several insurers. Failure to have this specialist insurance resulted in the PII terms being loaded, or they simply would not offer terms.

Some other leading insurers adopted a different approach, wherein merely demonstrating cyber resilience was acceptable for them to provide a quote.

We will be reviewing our experience of this season in more detail. However, it has been evident that businesses that took the time to produce a quality presentation for insurers were viewed more favourably, making more options available to them on better terms. This statement goes for those practices that may fall into this higher-risk proactive area category, along with those that have a more desirable practice profile to insurers. Those that have taken the time to educate insurers about their practice, particularly articulating their approach to risk mitigation, have done better.

While there are similarities between practices undertaking the same areas of practice, each one will be unique. You will have different processes and procedures and you will have differing governance structures in place. I’m confident that everyone would appreciate being treated uniquely, especially when it leads to favourable outcomes. Therefore, I cannot emphasise enough how important it is to clearly articulate what sets you apart and to provide the underwriter with substantiating evidence for their records to validate their decisions.

We will produce a more detailed report on what has happened during the renewal season. In the meantime, for LPM readers renewing their policies in the spring of next year, we strongly recommend putting in the extra effort to create a high-quality submission for insurers, even if your practice profile is already favourable. Recent history has shown that this extra effort can yield significant benefits. For support and guidance, please do not hesitate to contact me or a member of the Lockton team.