Solicitors' PII: Want to know how the 1 April 2023 renewal went?

Amidst the current economic turmoil many law firms will be wondering what the next renewal of their solicitors’ PII is going to look like.

With 28% of Howden’s SRA-regulated clients having renewed their cover on 1 April, we have enough data to provide some insight on what we expect to see for the rest of 2023 and at the 1 October renewal in particular.

We will be providing a more in-depth analysis in our Market Report that will be released in early July, but in the meantime we are pleased to report that we are in calmer waters and while premiums are not reducing as standard, we are continuing to see more modest increases and more appetite from insurers when it comes to new business.

Primary Cover (£2m/£3m)

Excess Layers

For those firms yet to renew in 2023 we are anticipating that the “steady as she goes” environment outlined above will continue as we move through the year. While underwriters are concerned about the current economic challenges and the potential for this to result in an increase in claims activity, we are not currently seeing a spike in notifications, which is good news for now.

We will continue to keep you updated on market developments and any changes to our forecasting, but never hesitate to contact us if you want to discuss matters in more detail.

And a final word about the Building Safety Act 2022 and your PII

Those law firms that undertake conveyancing work will be familiar with the introduction of the Building Safety Act 2022 (“the Act”) and the impact of this on the sale and purchase of relevant leasehold properties in particular. The introduction of the legislation has also prompted changes to the Mortgage Lender’s handbook, with some lenders introducing reporting requirements that will further increase the risks to legal professionals involved in these transactions.

We note that a number of firms are quite rightly exercising caution on this issue and in a recent survey of 196 conveyancers, 52% advised they were not currently acting on sales or purchases of leasehold properties affected by the Act and a further 15% advised they were only acting in transactions with certain lenders.[1] This approach will help ensure that a firm (and its PII) is protected from the increased level of risk while these issues continue to evolve - which is happening at pace.

We want to encourage law firms who are engaging in this work to consider the potential impact when it comes to the renewal of their PII. While it is still early days, expect that underwriters will be monitoring this issue and might include additional questions on proposal forms regarding transactions that are impacted. Are you confident that you can satisfy underwriters that you have a suitably robust risk management process in place for this work and that it is being observed across the firm? Will you have the relevant data to be able to respond to their questions?

We know that our clients take risk management seriously, but now is the opportune time to stand back and review and reflect on the risks relating to this work from a PII perspective.

Finally, we want to take the opportunity to encourage all practitioners engaged in conveyancing to lobby their regulator and membership body to advocate on your behalf and challenge the onerous requirements that have been imposed. It’s time to push back…..the buck shouldn’t always stop at your door.