Simon Thomson, policy adviser at the Law Society, looks at how coronavirus (COVID-19) is affecting professional indemnity insurance (PII) and explains our work in this area.
One of the issues that has been at the top of our agenda since coronavirus struck has been PII.
From this perspective, the lockdown was especially badly timed, because 1 April was the second most common renewal date for PII, with approximately 20% of firms attempting to secure new cover at this time.
The PII market was already beginning to harden, with some underwriters leaving and others compelled to tighten their requirements, to ensure profitability.
Add to this a global pandemic, and we’re now facing conditions that one broker with almost 30 years’ experience characterised as “the worst in living memory”.
The good news is that the Solicitors Regulation Authority’s (SRA) minimum terms and conditions do not offer an exclusion for claims arising from COVID-19, which means that firms that have secured cover should have a minimum indemnity limit from £2 million to £3 million to deal with any claims.
What we’re doing
We’ve been working with our members, the SRA, brokers, and insurers to better understand the current market, and how members can be best supported.
We’re investigating regulatory responses, and signposting government-backed and private sector facilities that could help firms struggling to meet the cost of premiums (which may now be substantially higher than expected) at a time when cashflows have suddenly become far less certain.
As part of this, we’ve developed a Q&A on renewing your firm’s professional indemnity insurance, which we’re updating on an ongoing basis, as new information becomes available.