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Brian Boehmer

Partner, Global & Professional Financial Risks (Mid-Market Solicitors), Lockton

For once, the news concerning solicitors’ professional indemnity insurance (PII)  is generally positive. Market conditions are improving; many of the longstanding and leading primary insurers have an appetite to grow their respective portfolios, and we’ve also seen two new insurers enter the primary marketplace.

In addition, more insurers are willing to provide additional layer capacity – an area of the marketplace that has been dominated by one insurer for a significant number of years. It is pleasing to finally have some healthy competition.

Insurers look fondly on Welsh legal practices

Many leading insurers view the legal profession of Wales as an appealing community, and they tend to give serious consideration to putting forward compelling quotations.

Reasons for this include:  

  • When comparing regions of the UK, Wales continues to be one of the best performers from a claims perspective
  • For higher risk work practice areas (e.g. conveyancing), the values transacted upon are more reflective of insurers’ desired risk threshold
  • Many Welsh firms have a local and loyal client base, something that insurers pay attention to when considering a firm’s risk profile

Measuring insurers’ risk appetite

 Underwriters are alive to, and concerned with, current economic realities.

Insurers’ increased risk appetite should not be met by complacency, however. Despite their big targets, underwriters are alive to, and concerned with, current economic realities, including the UK’s current recession, and evidence of rising claim values.

Likewise, many individuals and businesses are no longer being propped up by government support provided during the pandemic. Some insurers are naturally concerned about companies failing and entering administration, property developments falling through, or homes being repossessed – all of which typically trigger a significant surge in professional negligence claims.

In response, some are reducing their conveyance threshold and the percentage of property work undertaken that they will quote. As you would expect from an active marketplace, however, all insurers react differently; others are doing the exact opposite and collecting greater premiums, perhaps encouraged by rising interest rate-driven investment income.

Capitalising on the improving PII marketplace

For Welsh practices to capitalise on a changing but improving PII marketplace, we recommend that they pay attention to two items highlighted in our Solicitors Guide to PII:

  1. Produce a quality presentation – this should be reflective of your practice; use it as an opportunity to educate the underwriter about your work, and to provide them with the evidence required for their file. Take the time to differentiate yourself from your peer group.
  2. Select the right representative – this should be based upon which insurers they can approach directly on your behalf, along with written detail of those insurers’ appetite for business.

Dispelling a myth

While no representative can guarantee a quote, they can at least advise if you fit the initial barrier to entry.

Contrary to what you may have been told previously, for practices of between 1-10 partners (members/directors), no single broker can access the entire solicitors’ PII market on your behalf. The reason for this is the many leading insurers adopt a limited or exclusive distribution panel. As a result, if you do not select the right representative(s), you could unintentionally miss out from showing your presentation to a significant number of the active insurers. You may also miss out on the most favourable terms available.

As highlighted above, every insurer has a different appetite for business, determined by partner numbers, fee size, and/or your activity profile. While no representative can guarantee a quote, they can at least advise if you fit the initial barrier to entry. Other factors also play a part in the underwriting risk assessment, such as claims and regulatory involvement or activity, supervision and governance, financial stability, reputation, and general risk management.

While some insurers are tightening their exposures to certain areas of practices, others are relaxing them. You should be asking your representative who they can approach directly on your behalf, and what their appetite is for a practice of your profile.

For practices that renew now, I would encourage you to check out our Solicitors’ Guide to PII, and contact any member of the Lockton team to ask for a second opinion. We may validate the offer you have been presented with, but we also benefit from insurer options that are unavailable through any other broker. At the very least, these may aid your own negotiations.

Should you be renewing later in the year, we would be delighted to engage with you and discuss your specific requirements and how we may be of benefit to you.

Get in touch

Contact us today by emailing, or visit Lockton’s Solicitors page.

Brian Boehmer

Partner, Global & Professional Financial Risks (Mid-Market Solicitors), Lockton

Brian is a Partner at Lockton specialising in Professional Indemnity Insurance for all professions, particularly for Solicitors, IFA’s, Insurance Brokers and Surveyors.  In addition to managing a portfolio of clients, he has a leading role in negotiations with insurers.  Brian has a wealth of experience in structuring and administrating group insurance solutions. To view his full profile, click here.