- By Calum MacLean
- 05 September 2024
Four principal factors will influence premiums for law firms this October renewal season. While none are new, market dynamics ensure that they play out slightly differently each year. Miller’s Risk Manager, Calum MacLean discusses these below.
Insurer appetite
The market for solicitors’ professional indemnity (PI) goes through cycles as new claims trends emerge and others fall into relative abeyance, new markets emerge, and wider insurance market factors come into play. There continue to be changes in underwriter appetite even as we enter the final furlongs of this race to 1st October.
Work-types
Your practice areas have a material bearing on premium calculation. It is well known that firms with more than 25% conveyancing will typically have a reduced pool of insurers willing to underwrite them, for example. However, this has changed in recent weeks, with many insurers relaxing this threshold and considering firms with higher levels of conveyancing subject to proven claims track record and evident risk management.
That said, property work, in particular residential property, often attracts a premium weighting as it continues to generate a disproportionate number and value of claims. Conversely, it is no surprise that areas that are generally perceived as being lower risk by underwriters, such as criminal law and immigration work, attract lower rates on fees.
Firm culture
The underlying culture of your firm is more evident than you might think, and also a reliable long-term indicator of risk performance. Many firms have a comprehensive library of policies in place, yet still generate a volume of claims. The tone from the top, both senior and departmental management, has a much greater bearing on behaviours than any policy. Effective work processes are a different matter – as they tend to reflect a genuine investment of time and money in systems that make working compliantly easier, and deviations from good practice easier to spot. This was a key theme at our annual risk conference this summer.
Claims
Unsurprisingly, your claims history is central to the premium calculation. If you are a firm with claims on your record, this is not necessarily a cause for concern. Most firms make notifications and face claims. Insurers view a precautionary approach to notifications as a good thing. Firms can also simply be unfortunate in having a high-value claim. Most concerning to underwriters is a pattern of costly claims, without evidence of concerted action to identify and address the underlying causes.
It is therefore vital that the presentation of your claims is clear, and evidences risk improvement actions implemented off the back of it. It should not be assumed that underwriters during the busy October renewal period will be able to independently grasp a claims history.
