News
State of the PII Market – April 2024
9 April 2024
Solicitors’ Professional Indemnity Insurance: How did the April 2024 renewal look?
1st April sees many Solicitors renewing their Professional Indemnity Insurance (PII) and this renewal period is usually a good indication of what will happen when the bulk of law firms come to renew their PII policies on 1st October.
In April 2024, we truly started to see more capacity and competition in the PII market, downward pressure on rates and better premium value for most practices. So, what exactly has been driving this change? How much could your professional indemnity insurance cost, and how should you plan for your firm’s renewal?
Market Conditions
From around 2019 – 2022, PII market conditions were extremely tough, especially for law firms. Claims costs for the profession in any given year were only just being met by premiums collected from the profession, many Solicitors were experiencing large claims due to a variety of issues (the growth of cyber breaches, buyer funded developments going awry and conveyancing becoming more commoditised, to name a few) and PII as a class was performing badly for most insurers, as highlighted by Lloyd’s of London’s thematic review in 2019.
A slightly brighter economic outlook post-Covid, coupled with most white collar professions (including law firms) performing well financially in the last couple of years, has relieved the pressure on insurers’ books of PII business somewhat and enabled new entrants to consider coming into the market too.
Since October 2023, we have seen existing Solicitors’ insurers willing to write more business by way of total premium (increased capacity) and also be able to consider law firms undertaking more work such as conveyancing (increased appetite). There have also been new insurers entering the PII space for Solicitors, as well as new facilities created by some insurers already in the space combining their capacity.
April 2024 – Professional Indemnity Insurance Pricing & Competition
For the April 2024 renewal, insurers’ desire for business and keen pricing increased again somewhat. Across JMG’s law firm clients, the average premium reduction on Primary Layer cover was 25.5%* based on like-for-like fee income and renewal periods for firms renewing on 1st April, the average client premium reducing from £77,785 to £57,897*.
Across excess layer premiums, there was a similar story albeit with slightly less reduction in premiums, with JMG clients seeing an average reduction of 18.5%* on cover purchased above the mandatory £2M or £3M limit.
These savings for clients were driven by a combination of competition from alternative insurers and incumbent insurers generally responding to that competition. Most PII providers now seem to recognise that we are in softer market conditions and that they may not be able to carry the rates of recent years if they want to retain clients.
Looking towards October
A softer market also often means some additional challenges in managing the renewal process; there are likely to be more brokers attempting to win market share, often with different, sometimes confusing messaging about which insurers have appetite for your firm and how they can be accessed.
This means it is even more important to have a clear plan ahead of time. Firms should:
- Engage with brokers early to understand their experience of dealing with law firms, which insurers they have relationships with and how they access them (direct or via another broker)
- Where possible, meet their existing and potential insurers during the coming months, either virtually or in person
- Form a clear strategy as to which insurers they want to approach for quotations and which brokers they will use – ensuring there is no duplication between brokers and insurers. Even with increased appetite, the market is still relatively small and there is no benefit to approaching the same insurers via multiple brokers.
- Prepare proposal forms, financial and supplementary information in good time to submit 2 -3 months prior to renewal.
- Discuss any quotations coming back in full with your broker, including the merits of switching insurers if you are considering this
- Similarly, constructively question any brokers you engage with and try to make a separate decision about their value, as opposed to the actual insurer and premium. You should always have an understanding of the brokers’ specific experience with law firms’ PII, what they will provide beyond just placing your insurance and how they are remunerated.
By taking time to understand the market dynamics and how they affect your firm, most practices should be able to expect more competitive PII terms at their next renewal.
JM Glendinning Professional Risks remains a fully independent, specialist Professional Indemnity broker working with law firms of all sizes throughout England and Wales. If you would like to discuss your PII renewal, please don’t hesitate to get in touch.
*Statistics taken from JMG’s law firm client base with a PII renewal date of 01.04.2024.
Gareth Milner
Managing Director
JM Glendinning Professional Risks
gareth.milner@jmginsurance.co.uk
07923 246 237
