Solicitors Professional Indemnity Insurance (PII) - Looking ahead to renewal in October 2022

PII Market conditions in the past 12 months

Market conditions to consider include:

• A shift from reduction to stagnation of insurer capacity
• Insurers have continued to adopt a cautious approach
• Insurers requesting higher excesses dependent on risk exposure
• Rising costs for primary and excess layers
• Very limited availability of longer-term policies
• Relaxation in the demands for Partner Guarantees
• Increased focus on cyber risk
• Greater challenge for smaller firms with a significant property exposure

Market conditions post-April 22 renewals

Market observations from the April 22 renewal:

• Plateauing of rate increases
• Frequency of notifications have reduced, however, there has been a continued rise in the severity and cost of claims
• Covid-19 fears of insurers not realized (yet!)
• No new market entrants
• Co-insurance is leading to pricing inconsistency in some cases
• A “cooling off” of rate increases in non-legal PII markets, with new capacity entering

PII Claims

A number of trends in relation to claims made have been identified over the last 12 months, including:

• Property (frequent and expensive)
• Matrimonial (spousal pension rights failures)
• Contested probate
• Cyber breaches

Insurers have a number of areas of concern going forward, including:

• Influx of litigation funding capacity
• Impact of inflation on claim values
• Agile working and premises review (claims from lease work)

PII Looking forward

Insurers see some positivity in a number of areas going forward, including:

• The general outlook
• A prediction of flat-small rate increase for well-run firms
• Rates to dilute moving into 2023
• Greater competition (some insurers seeking to increase market share
• Inevitable new entrants will join leading to downward pressure on rates

Although there is a positive outlook, a number of things may have an impact on this, including:

• A looming recession
• International events (Ukraine crisis)
• Regulatory changes
• The renewal process will remain burdensome
• Significant property work still presenting scarcity of choice

As in recent years, firms should plan ahead for the renewal process, with the aim of having their presentations prepared two months prior to the renewal date. Presentations will be the front window into firms and therefore first impressions are critical; be open and transparent, and provide insurers with the confidence they need that your firm is a good risk to cover.    

If you have any questions related to the PII renewal, please contact Marc Rowson or Dan Blundell at Lockton (020 7933 2986, [email protected]/[email protected]).

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