The latest round of PII renewals is upon us with a significant number of firms looking to review their cover for a 31st March or 1st April due date. During the October season, average premium increases of 20% to 25% were in evidence for firms with no claims or SRA issues.
It is expected that this trend will continue, with a lack of available capacity being one of several causes for rate increases. Insurers, who are, contrary to some beliefs, commercial concerns, know and understand that by reducing the number of their policyholders, but increasing their premium per case, they can improve their loss ratios and operating expenses, and after many years of a highly competitive market, they want to ensure that they increase their margins (for some they would like to actually get into profit on this part of their book).
An inbound e mail from a client of our consultancy as I was writing this, asked if we could help them with their PII covers and that they had four brokers in tow, and this approach still persists. In addition, many brokers continue to see Solicitors Professional Indemnity as a commoditised line of business.
For any firm that takes this view to their renewal, they may get lucky, however they should understand how the Insurer actually rates their premium. Their proposal form is uploaded into a system which will then turn out a rate, which is reviewed by an underwriter and either goes forward, is amended or declined as the case may be.
So – for firms and their brokers that simply chose to send a proposal form in on its own, they will get what the “computer” says they will get – ie a standard market rate.
At Advantage our business carries a quality and compliance focus, and our dashboard and audit function enables us to capture all of the good features of a firm, which are crucial to the underwriting process. The underwriter can and will give rate discounts for better quality features, but only if they are recorded, backed up in writing and demonstrated to the Insurer so that they have a note on their file to justify the reduction.
That is why our clients are able to benefit from a process that minimises their premiums in the medium term, and also audits their cover to ensure that key aspects of their business such as client money are protected.
A market trawl of the entire range of Solicitors Insurers is no longer the correct focus for many firms and they should instead ensure that they have spent time bringing in an independent specialist to highlight all of their good positive features.
Advantage Consulting is an end to end legal sector consulting business with abroad range of services from digital, quality, M and A/business restructure, and protection. Its broking service is provided by an FCA registered “associated” firm.