The Law Society has encouraged the insurance industry to support a composite proposal form for the 2012 renewal. We are not yet at the stage of complete industry acceptance but are working towards this goal.
Who's accepting the form?
As of 27 June, insurers accepting the form:
Insurers/underwriting MGAs: APRO Management, Chartis, First Title*, Hannover*, Indemnity Risk Solutions*, Liberty**, Monitor Insurance*, RSA Insurance (not accepting new business), W.R. Berkley*
* Application may require supplementary questions
** Will only provide indicative quote - firms must complete provider's form for final quotation
Who's not accepting the form?
Insurers: Travelers, Zurich
What is the issue?
For solicitors who are once-a-year purchasers and non-PII experts, the lack of a standardised application process is difficult to comprehend. The need to fill in the same or similar information about the firm to satisfy the requirements of different insurers can be deemed unnecessarily time-consuming and extremely frustrating. This is especially the case given that it seems, at least on the face of it, that the majority of the forms cover the same types of questions.
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What is the Law Society doing about it?
The Law Society has engaged with insurers and brokers to try to bring about a composite proposal form for the 2012 renewal.
A 'common' proposal form has been on the agenda of the Law Society for some time now. We started the conversation with insurers before the 2011 renewal but were told that we were 'too late' as the content of forms is decided in April. Therefore, hoping to have a form ready for the 2012 renewal, we started early prepared to work with both insurers and brokers to agree a form that includes some of the most common elements of proposal forms. For more background to its development, see the article 'Common proposal form: utopian vision?' in Insurance Matters 8 (PDF).
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Will brokers/insurers accept the form?
The Law Society recognises that it may require time for support for a common proposal form to grow amongst insurers and brokers. The current form is likely to go through a series of revisions with questions being added/removed prior to each indemnity year. However, not all brokers or insurers have committed to use the form at this stage.
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If I fill this form in, will I have to fill in any other form?
Unfortunately, at this stage, the answer is yes. This is not a truly common form yet and some insurers will require more detailed questionnaires for specific work types, eg conveyancing or financial services work. Other insurers may ask supplementary questions based on certain answers given by solicitors on this form. However, about 70 per cent of the questions are the same for all insurers.
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Why is the form so long?
Developing a composite form has necessarily involved putting together the different question sets of market participants in order to ensure the form is more widely accepted.
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What are the benefits to our members?
A standardised form has the potential to bring administrative ease and simplicity to the process and will ultimately make it easier for our members to obtain quotations from different insurers during the PII renewal process. Solicitors should be careful, however, to ensure their form does not go to the same insurer more than once as this could be counter-productive. The Society's PII Buyers Guide (PDF 200kb) has tips about managing these relationships.
It also has the potential to increase transparency in insurers' underwriting criteria.
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Why are solicitors filling out multiple forms?
Because of realities such as tied arrangements and segmentation of the solicitors' PII market, some solicitors may need to use more than one broker in order to gain access to the full range of qualifying insurers that are willing to offer PII to the firm. Unfortunately, it is usually smaller firms that are more likely to need to shop around.
To find out more about access to markets, read the Law Society's PII Buyers' Guide (PDF 200kb). Remember if you use multiple brokers, you should ensure that your proposal from does not go to the same insurer more than once. This could result in counter-productive negotiations and slow down the entire process.
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What can I do to make a common proposal form a reality?
This is a fluid process but we encourage members and market participants alike to help us make the common proposal form a reality. If you would like to see the Law Society succeed in this endeavour then if your broker or insurer will not accept the Society's form, we encourage you to ask 'why not?'
It is not yet a truly common proposal form but with your support it could become so. You are the client of brokers and insurers, so let them know that this is something that you would like to see happen in the future. If there is sufficient consumer support then insurers will have to listen. Some are already on side.
Furthermore, the Law Society is not adverse to lobbying the Solicitors Regulation Authority (SRA) on this issue if necessary. The Law Society of Ireland introduced a mandatory single proposal form last year and we believe this was an important factor in helping Irish solicitors test the market more easily.
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Why isn't it an online form?
We did not have sufficient time or support from insurers and brokers to develop an online form for this renewal. Instead we have created an editable PDF version that solicitors can print off and send or complete online, save to their desktops as a PDF and then email to brokers or insurers. See further instructions for filling out the form (PDF 87kb)
We did offer to develop an online system provided there was sufficient insurer support at an early stage. An online form has advantages as it can have greater functionality, for example, only showing questions that are relevant based on answers previously provided.
We even offered to give solicitors the ability to 'log in' to pre-populate certain fields from the Law Society database. This would have saved solicitors time in completing the form. It would also have provided insurers with increased confidence about the accuracy of information in the proposal form.
Under the SRA's client financial protection arrangements, insurers must provide PII under the minimum terms and conditions policy notwithstanding any misrepresentation by solicitors on the proposal form. By increasing insurers' level of confidence about the accuracy of information, we hoped to assist solicitors obtain affordable insurance.
We would still like to see the format of the form evolve into an online form. We remain prepared to work with the insurance industry to develop this in the future.
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Has this been done before?
We are encouraged by the Law Society of Ireland's introduction of a mandatory common proposal form in the 2011-12 renewal. Insurers in Ireland raised the same objections and concerns that were put to us, however, contrary to these threats, no insurer left the Irish market because of the imposition of the composite proposal form. Anecdotal evidence from Ireland suggests that solicitors were able to make better use of their available market as they were able to obtain quotations from multiple insurers without the frustration of filling out multiple forms.
The Law Society is working hard to achieve the same outcome for solicitors in England and Wales. However, as we are not the regulator and are unable to mandate acceptance of the form, we consider that it may take some time for the form to gain widespread acceptance.