Solicitors' PII: Want to know how the 1 April 2023 renewal went?
18 April 2023
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)
|Appetite||Insurer appetite is continuing to improve. Whilst there is less appetite for firms that have conveyancing exposure or a poor past claims record, we are starting to see underwriters responding to those cases where there is a good broking argument to be made.|
|Capacity||There were no new Participating Insurers for 1 April 2023, but new market capacity is expected in July this year, which bodes well for 1 October renewals. We are also pleased to report that no insurers have left the market and we continue to have the same A-rated markets prepared to offer PII to law firms.|
|Premium||While some firms continue to experience a rate increase when it comes to premium, the average rate increase is being sustained at a single-digit level, which is a marked improvement on the considerable increases we have seen in recent years. As always rate increases vary from insurer to insurer and depend on the unique characteristics of each firm, and its claims experience in particular.|
|Appetite||We have returned to a position where there is once again appetite in the market for offering top-up PII cover to solicitors.|
|Capacity||It is Howden's view that rate increases in recent years have given insurers more confidence that current pricing levels are commensurate with the risk. However more capacity in this market would be helpful if current rates are to soften.|
|Premium||Premiums were relatively stable and increases were largely the result of increased fee income or large claims having been notified.|
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. 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.
John has been a broker for over 30 years, specialising in helping UK solicitors find the insurance they need. His team works with law firms large and small to ensure that they are covered for every eventuality.