Making the most from your PII renewal
Key takeaways from spring renewals
Reflecting on the 2023 spring renewal season, most insurers’ rates plateaued (although a proportion of insurers did wish to increase rates).
Extended policy periods also returned to availability, albeit in limited number.
This signals a sea change to recent years, and reflects the positive dynamics within the PII marketplace currently.
Most leading participating insurers now have an appetite to grow their portfolios with the addition of new business.
New insurers are also expected to enter the marketplace before October, ensuring that firms with a desirable profile have more insurer options available at this year’s renewal.
The emergence of new capacity is good news for well-run practices, which can expect a softening in the rates charged come October.
What is not yet known is how diluted rates will become.
We expect extended policy periods to become more readily available, with insurers once again offering the choice of up to 18 months for a portion of their portfolios.
Without wishing to dampen the positive tone of this update, one caveat is that the dilution of rates doesn’t necessarily mean there’s set to be a dramatic reduction of premiums.
For many firms, rising inflation has fuelled an increase in fee income, which will naturally have an impact on the premiums charged by insurers.
It does mean, however, that for well-run and successful practices, the cost of PII premiums should not erode profit margins further, as it may have done at recent renewal periods.
The market is showing initial signs of being rewarding for some firms ahead of the 1 October renewal, particularly those that undertake less than 35% conveyancing and/or pay a six-figure premium.
It will be of no surprise that the softening of rates may not positively impact the entire legal profession.
Early signs seem to suggest the market is not in the same stage of recovery for practices that:
- have experienced an adverse claims position, and/or
- are heavily involved in perceived higher-risk practice areas, such as conveyancing and probate work
The false start of one of the expected new entrants, coupled with concerns around the economic outlook, has served as the proverbial handbrake for this area of the profession: an area that deserved a dilution of insurance cost.
Firms should not be complacent and cannot expect premiums to fall without any effort on their part.
Recommendations for practices
Insurance renewal season is your shop window for insurers, so use the opportunity wisely.
To capitalise on the improving insurance market conditions, our recommendations are:
- start the renewal process early
- take the time to prepare a detailed presentation that presents a positive reflection of your practice
Sole practitioners through to four-partner practices should ask which insurers their representative(s) can access directly on their behalf, and what appetite these insurers have for the specific risks that are to be transferred.
There is no benefit in engaging with several intermediaries with the same insurer access, as insurer duplication could have a negative impact on the outcome.
Similarly, there is no benefit in presenting risks to insurers that fall outside of their appetite framework.
To further streamline the process, you could:
- remove unnecessary links in the chain
- ask whether your current broker can undertake an extensive direct marketing exercise on your behalf
If this isn’t the case, act quickly and either complement or replace the services with a reputable alternative.
Lockton would welcome the opportunity to canvass the market for those firms who we do not current represent, or as a minimum provide each of you with a second opinion.
We have direct access to more active participating insurers than any of our peers, and will have insurer solutions that your current representatives cannot provide.
Speak to a member of the Lockton dedicated solicitors’ team to see how we may be able to help your practice capitalise on the improving PII environment.
You can call 020 7933 2034, contact me directly on 07971 749840 or email firstname.lastname@example.org.
Find out more
Renewing PII can be complex, costly and time-consuming. Explore the findings of our latest research on trends in PII to make informed choices about your options.
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