1 April 2025 Solicitors’ PII Renewal Review – can the market soften any further?

If you renewed your insurance on 1 April this year, you will likely have noticed that it was much less of an ordeal than in recent years when the hard market was prevalent.

We reported in October 2024 that the soft market had returned with a vengeance, which continued to be the theme for this most recent renewal date.

We will be providing a detailed analysis of the 1 April renewal and our predictions for the rest of 2025 in our next Market Report which is due to come out in July. Here are the main highlights in the meantime.

Capacity

Capacity continued to be plentiful. As well as two new insurers who have recently entered the market within the past 18 months (Alchemy Underwriting and Fortegra), there was also another new entrant, namely Westfield.

At Howden we were also able to offer our clients exclusive access to the established Howden facility underwritten by A-rated Lloyd’s of London insurers. Additionally, we continued to uphold strong relationships and direct access to a wide range of other A-rated markets that have long been providing solicitors’ PII. This growth in capacity is promising for firms still to renew in 2025 (including 1 October), especially for Howden clients.

One other aspect worthy of mention is that co-insurance is becoming increasingly popular to insurers; particularly for larger firms which pay annual premiums of six figures or more. This enables insurers to provide cover to larger firms, but without having to take on 100% of the risk.

Appetite

The increased capacity has led to strong competition among insurers as they are keen to write new business to make up for the shortfall in renewal rates (see further below) and lost business to competitors – 25% of our clients moved insurer at the 1 October 2024 renewal – the highest figure we can recall, certainly in the past 15 years or so.

A number of insurers have become much more flexible in their underwriting parameters, especially in their attitudes to higher-risk areas of practice. Of particular note was the increase in insurers prepared to consider firms with high levels of conveyancing and personal injury as a proportion of a firm’s overall gross fees. By way of example, one insurer would previously only consider firms that had a maximum of 5% conveyancing, but this has now increased to 50%. This meant that our clients had a wider range of insurers to consider.

Also of note was that one long-established insurer which has traditionally only sought to insure large firms (£10M+ turnover) has now decided to write much smaller firms. A note of caution here, however; with the cyclical nature of the insurance market underwriting appetites can change quickly, so this is something to consider if you are looking for a long-term relationship with your insurer.

Premiums

The majority of our clients enjoyed rate reductions (which can lead to lower premiums, although this depends on a number of factors), provided that they had not had any significant claims or large deterioration in their claims experience. In some cases these reductions were quite substantial, particularly for those firms which had experienced claims activity historically, but had been able to convince insurers that the firm as a risk had improved and/or that the lessons learned from a large claim meant that a similar claim was unlikely to recur.

Notably, a number of clients told us from the outset that they were looking to achieve a premium reduction this renewal to help offset the increase to employer national insurance contributions which kicked in in April.

Policy period lengths

The majority of insurers (although not all) were offering longer-term policies as standard (typically 18 months, although one insurer was offering two-year policies to some clients!) This was the case even for firms which had significant fee income growth projections, which would normally make offering a longer-term policy financially unattractive to an insurer.

Many (almost 40%) of our clients took advantage of this and opted for an 18-month policy, which was a significant increase from 25% of our clients doing the same for 1 October 2024. A longer-term policy reduces renewal administration, locks in savings and provides financial stability and guarantees terms for a longer period, so it is not surprising that this was the case.

Excess layers

There is increased capacity in the excess layer market and, as a result, there was a marked improvement in rates and we found that savings were generally achievable for excess layer policies for our clients purchasing up to a £10 million combined limit of indemnity. Above this level premiums were generally stable, owing to low claims activity historically at this level meaning higher excess layer premiums have generally always been fairly keenly priced.

Please note, however, that as excess layer policies do not have to comply with the SRA Minimum Terms and Conditions of Professional Indemnity Insurance (MTCs), policy wordings and scope of coverage can vary quite significantly. At Howden we are able to advise on what would be the most appropriate excess layer policy for your particular firm’s profile if you purchase excess layer insurance.

Premium financing

We reported in our last update for the 1 October 2024 renewal that firms were finding it more difficult to obtain financing for their insurance premiums, with credit providers asking for more information and applying more stringent criteria than in previous years and taking much longer to make decisions. This continued to be the case, although it was a bit of a mixed bag, as there were varying interest rates being offered by premium credit providers, which resulted in some rate shopping for those firms deemed to be a good credit risk. However, as it remains a challenge for many firms, please ensure that you get your financing sorted as early as possible, particularly if your firm’s financial position is not the best.

Cyber

There was a small increase in uptake of cyber insurance by firms, although adoption of cyber insurance remains low amongst the legal profession, despite the very real threat of cyber crime to law firms. We also noticed with some surprise that there are still many firms which fail to comply with insurers’ minimum requirements for cyber insurance such as multi-factor authentication (MFA). Premiums seem to be reducing slightly for larger firms, but not for typical high street practices, or firms which undertake a significant level of conveyancing.

AI

With the ever-increasing adoption of AI in law firms, underwriters are starting to ask questions in proposal forms about how it is being used, across which areas of practice, what policies and procedures are in place and whether staff are being trained on using AI. Whilst there has been no notable claims activity involving AI to date, it is inevitable that this will change at some point in the near future given the exponential increase in its use in firms, so you should have this in mind when completing your proposal form.

Proposal Forms

As we experienced for the 1 October 2024 renewal, the majority of insurers were prepared to accept short-form declarations rather than insisting that firms had to complete lengthy proposal forms, which was good news for many of our clients. We expect this trend to continue throughout 2025, although most insurers normally insist on a full proposal form being completed every 3 years in order to have a full understanding of your firm as a risk.

Overall, this was generally a very positive renewal season for our clients and we expect it will be a similar story come the 1 October renewal later this year.

Are you a Howden client and yet to renew?

If your firm is due to renew between now and the end of the year, then the above should be encouraging news for you. We will continue to monitor the market closely and when we contact you about your next renewal we will discuss with you the potential to secure terms early, whether a shortened proposal form is an option, if you would like to consider a longer-term policy, or anything else you would like to ask us.  

Not a Howden client? 

We'd love to talk with you. Our exclusive facility is only accessible by speaking to one of our PII specialists.  

You'll want to be certain that you've covered the market ahead of your next renewal so make sure a conversation with us is on your to do list.  

Just a few minutes for an initial chat could make a world of difference to the outcome of your next PII renewal and the success of your business.