PII cover is typically renewed on 1st October by the majority of solicitors, but a
substantial proportion do it on 1st April. It is possible to predict how the market may
react in October by examining the outcome of the April season, although it is not
definitive.

There is currently unease in the PII market. There is a shortage of capacity driving
up premiums particularly in the accountancy, insurance broking, and design and
build sectors. These sectors have experienced severe increases. Insurance
companies are further unnerved by the pandemic and there is a sense of
uncertainty. In the financial world, a lack of capacity and a degree of uncertainty
make for shallow foundations. How firms are managing the exposures involved in
home working due to the Pandemic was a topic of interest for insurers during the
April season. It is clear that insurers are concerned about compliance and cyber
risks.

During the April renewal season, insurers exhibited little appetite for new business.
Several insurers, but not all, refused to accommodate firms with more than 25%
conveyancing work. There were an average of 15% to 25% increases on primary
layers of cover for firms with up to 10 partners. The increases, though significant,
pale in comparison to the doubling and tripling seen in other professions.
As a result of the profound lack of capacity in the market, excess layers of cover,
such as those from £3m to £10m, have experienced severe increases averaging
50% to 60% resulting from a trend towards major losses. Excess layers used to cost
between £1,100 and £1,550 per million of coverage not so long ago but sadly we no
longer live in those days. A premium increase of 15% to 20% is typical for excess
layers above £10m.

It is however important to remember that there is no such thing as a market norm or
an average. Risks are underwritten individually by insurers, and the exposure
combined with the claims experience can lead to a better or worse outcome than
expected.

Whatever the market does, our goal is to make sure the best outcome is achieved.
The importance of having a coherent strategy cannot be overstated. It is imperative
to start the process as early as possible. It is more important than ever to submit a
high-quality submission to underwriters. Our team has extensive experience and we
are here to assist you in navigating the PII market.

Recent months have also seen an increase in cyber claims. There is no doubt that
cyber criminals are taking advantage of remote workers. Ransomware attacks are
becoming increasingly sophisticated. Firms have suffered significant disruption and
losses as a result of cyber attacks, so if you haven’t already, contact us to talk about
your cybersecurity coverage today.

Recent changes to insurers’ arrangements for the provision of Professional Indemnity Insurance for licensed conveyancers has been welcomed by the Society of Licensed Conveyancers (SLC).

Now, from 2023, Council Licensed Conveyancing (CLC) firms must submit at least one PII application two calendar months ahead of their renewal deadline. The new changes mean that it will be a requirement for the Insurers receiving the applications to respond to solicitors no less than one month before the deadline in an attempt to minimise the risks involved for all parties when renewals are taken right up to the renewal deadline.

This change is designed to ensure the renewal process operates more smoothly than it has done in the past, thereby affording solicitor firms more time within which to make further enquiries and seek alternative insurance cover if they need to.

The CLC held a consultation on the issue earlier this year and the SLC have stated that they are pleased to see this new change which is very much in line with their response to the consultation.

Under the changes, whilst solicitor practices must ensure at least one PII application is submitted before the end of April, they also ensure that in the event that a firm is unable to secure PII cover at renewal, the firm’s current insurer is obligated to automatically provide a 90 day cover extension to allow firms to either secure new terms or make alternative arrangements which may include undertaking an acquisition or facilitating an orderly closure. It is worth noting that the current requirement for run-off cover to be integrated into every PII policy still remains in place.

The SLC have commented that they are fully supportive of the new arrangements for PII, just recently noting that whilst the 2022 renewal round was almost complete at the end of last month some firms were only just receiving renewal proposals from insurers with mere days to go, much too close to the 30^th June deadline to consider a proposal effectively or negotiate variations to terms.

It is hoped that the new arrangements will facilitate a much smoother and more efficient renewal process for 2023. The measures to extend the timeframe for practices struggling to renew their PII policies are both practical and sensible, and should allow for a more organised and considered application and renewal process for conveyancing practices from next year.

Legal Ex Plus are the experts in providing professionals with tailored insurance products with a difference that suit specific organisational requirements. By drawing on our vast experience and applying our in depth knowledge of professional services we are able to design innovative insurance programmes for each of our clients, many of whom have been with us since the early years. Call us today on 0800 180 4203 for the perfect solution for you and your business. 

As a result of the pandemic, the legal profession has realized that remote working is a viable option, and some individuals are eager to keep working remotely full-time. Under the Minimum Terms and Conditions (MTCs) for primary PII insurance, a fee earner working from home in England and Wales is covered in the same way as a fee earner working in the office. However, what about fee earners who have decided to move abroad and want to continue working from home and what are the implications for PII?

What the MTCs say

As a first step, the MTCs cover work performed in offices in England and Wales. This point is fairly well hidden within the SRA glossary, a commentary which defines a number of terms mentioned in the MTC.

The clause we can identify primarily here is clause 1.1 of the MTCs, which indemnifies each insured against civil liability to the extent that it arises from private legal practice in connection with the insured firm’s practice. The ‘Insured firm’s practice’ is defined in the glossary as the legal practice carried on by the insured firm as at the commencement of the period of insurance. And, ‘practice’ is defined as the whole or such part of an authorised body as is carried on from one or more offices in England and Wales.

So how is ‘carried on from one or more offices in England and Wales’ actually defined? When a fee earner needs to go abroad to deal with matters on a file for example briefing witnesses or to conduct mediation, or is perhaps responding to work emails during a holiday abroad, this would be covered by the MTCs. However does it still apply if the fee earner wants to stay working abroad on a permanent basis? 

Working permanently from home abroad

It is not particularly clear in the MTCs what the position is for fee earners who have decided to work outside of England and Wales on a permanent basis. 

However if a common sense approach is taken, the fee earner is likely to be considered within the scope of cover of ‘working from home abroad’ if their position is that of a principal or employee of a practice in England and Wales and working on cases where there is engagement between the practice offices in England or Wales, and the client. 

There will however inevitably be grey areas and there is certainly potential for insurers to take issue with these arrangements that may result in policy disputes. Therefore if your firm does employ fee earners who are, or plan to be, working consistently from a home abroad then you should think about what actions may be required to ensure you are fully covered.

Steps to take

Initially it is advisable to approach your broker to liaise with the insurance provider in this regard, requesting a firm confirmation that you are covered for employees working permanently abroad. It is also recommended that your firm reviews its other policies such as office and cyber policies, to determine whether the same approach is required. 

At the end of the day, insurers need to be sufficiently satisfied that correct and appropriate measures are in place within your firm to cover such aspects as confidentiality, supervision, document storage and cyber security. It is therefore advisable to make sure that your arrangements and procedures which you have in place to address these areas are clear, concise and well documented and that you include all relevant details when you raise these matters with your insurer in the case of employees wanting to work abroad permanently.

It is also worth noting that it may be beneficial for your firm to mandate that employees working from a home office abroad should not divulge their foreign address as being one of your firm’s offices, nor should they solicit clients locally by virtue of their foreign address. Firms should ensure that all postal communications relating to the matters with which they are dealing should continue to be sent to the firms offices in the UK, which is the same rule as that for those employees working from home in England or Wales. 

If you would like to speak with one of our expert brokers about your firm’s requirements or to obtain a competitive PII quote, please do not hesitate to contact us on 0800 180 4203 for a personal and professional service. 

The cost of professional indemnity insurance (PII) is one of the major overheads for new law firms starting out in business. 

The SRA requires all firms starting a new practice to carry professional indemnity insurance, but the costs of this essential class of insurance vary greatly between insurers. The Solicitors Regulation Authority (SRA) dictates policy wording to insurers, but the market for professional indemnity for solicitors can be complex.

In order to make an informed decision about which product is right for your firm, it is beneficial to have some understanding of how the process works. 

Starting a new Law Firm

New firms wishing to register with the SRA will have to submit a quotation or ‘offer of professional indemnity insurance’ from a professional indemnity insurer authorised by the SRA. As outlined in the SRA Indemnity Insurance Rules, the minimum terms and conditions must be followed. The following must be provided in order to obtain a quote; a fully completed proposal form, your business plan, forecasts for cash flow and the partners’ or directors’ CV’s

An underwriter can use this information to get a clear picture of how the business will operate, including its risk management processes and revenues.

Getting a Quote

Insurers dominate market distribution with 90% of law firms buying cover through brokers. In addition to lowering premiums, a good broker provides valuable advice and support, especially during the claims process. We are a specialist PII broker so for free advice or a quote please contact us on 0800 180 4203.

Depending on typical risk factors and market competition, PII insurance typically ranges from 1.5% to 5% of fee income. Rates will vary based on the work undertaken and the claim history however as new start-up firms have no legacy or history to insure, rates are usually discounted. 

Additionally, bear in mind that different insurers will have different minimum premiums. Insurance companies start with a minimum premium to insure a risk, and premiums can vary significantly for solicitors.

By law, the SRA requires you to carry run-off insurance if you stop trading. For a period of six years, this will be calculated as a multiple of the annual premium, usually three times the annual premium.

Calculating the Premium

It is a complex process to determine the risk profile of a law firm or any professional indemnity risk. In order to provide a quotation that precisely reflects the risk they are pricing, underwriters must be highly skilled and require a significant amount of information. The following are taken into consideration when calculating premiums: the firm’s claims history, the types of work performed by the firm, the number of partners, directors, and employees and the annual revenue of the firm

A fully completed proposal form will be required by the underwriter for the assessment of risk. Additionally, they may spend some time looking at the website of the firm and may dig deeper into the firm’s background.

Make the right impression

The importance of presentation cannot be overstated. Underwriters are evaluating your firm’s professionalism and quality so if the information you provide is poorly presented, it may affect their judgement and their premium offer or they may refuse to quote at all.

In order to receive a quotation, you must complete a fairly lengthy proposal form, and new firms also need to submit a great deal of additional information. An underwriter will carefully consider all of this information. A proposal is a reflection of the quality of your business to the insurance market, so you should make sure that it looks professional. It will be used by underwriters to judge you, along with your website and financial information.

Ensure your insurer is aware of the money and time you spend on risk management and quality improvement. Adding a few notes on this subject could help prevent this from being overlooked or not reflected in your premium.

How we can help

Our team have a vast experience in the field of business insurance and risk assessment and by applying our in-depth knowledge of professional services, we are able to design innovative insurance programmes for each of our clients. For a general chat, some free advice, or for a competitive professional indemnity insurance quotation, please contact us on 0800 180 4203 or email info@legalexplus.com. 

Law Firms advised to be proactive ahead of PII April renewals

For a busy law firm, it is easy to postpone renewing Professional Indemnity (PI) insurance. However, with the hardening insurance market we are experiencing right now, insurers will have a choice of companies to choose from. Renewals of professional Indemnity cover made later in the year – or proposals made now without sufficient information – may result in a sharp decline in options.

Risk information is more important than ever to underwriters. In a soft market, most underwriters only needed a fully completed proposal form for the majority of risks. Currently, insurers need to see financial records for the last couple of years, a current profit and loss statement, and answers to supplementary questions regarding the Pandemic and how the firm has handled the situation both operationally and financially, as well as information on cyber risk and conveyancing. If firms wait too long, they may find brokers have reduced access to markets or underwriters will be unable to respond to their enquiries.

On the other hand, companies that are proactive about renewals improve their chances of obtaining the best coverage, as well as establishing the foundation for a long-term partnership. This can be particularly beneficial as your business grows and changes. Brokers should help insurers meet the following criteria when preparing a renewal proposal to present their firm in the best possible light:

Begin early: When a proposal is submitted late in the year, there is less time to negotiate with the underwriter, which makes the insured a less attractive risk. Submitting your proposal early does not guarantee a lower premium, but it can help you find more markets that will quote.

Present concisely: It should be clear, concise, and easy to scan, so that an underwriter can quickly see your responses. Separate documents that outline the key elements of your risk management approach are also recommended. Explain what procedures you have in place to mitigate risk, identify what lessons you have learned from previous claims and what preventative measures you have taken.

Offer more: Make sure to provide more than the minimum answer required, especially when explaining the firm’s risk management. An organization that worked smoothly during the lockdown for example, might be able to point to its longstanding flexible work policy and the ability to have employees log on to work from home before the pandemic. If your firm is moving to remote work, you should outline how the supervision and systems will change to accommodate it. It’s not unusual for underwriters to want everything to continue as normal, so insurers should be aware of the risks of any change in company culture.

Be conscientious of risk: Claims may be triggered by underlying causes. By asking yourself five “W” questions, you can demonstrate that you tried to get to the heart of the claim; Why did it arise? Why did the problem occur in the first place? What has happened since? What else could be affected? What can you do to make sure it doesn’t happen again? By using this procedure, the firm can demonstrate that it has delved deeply into the reasons for why a problem occurred, as well as identified the issues that led to the problem and has taken steps to rectify them.

Think long term: Including an insurer from the earliest stages of planning a change within an organization can lead not only to better insurance protection but to a lasting relationship. Regardless of whether the proposal form asks about your firm’s future plans, sharing them with an insurer is in your best interest.

Plans with insurance implications could include closing a conveyancing department, conducting due diligence or securing runoff coverage in preparation for a merger or acquisition, or expanding into another practice area. By involving the insurer early, risks can be minimized.

Although your plans may not seem to have anything to do with insurance, if your broker learns of any changes too late, he or she would be unable to advise the underwriters. Brokers who know about what you plan can help them manage the risks associated with it and it ultimately leads to a stronger relationship.

Call our expert team today on 0800 180 4203 for a free tailormade, professional indemnity insurance quote now.

In the UK, lawyers and law firms incur major overheads due to professional indemnity insurance (PII). Although we have only just entered 2022, the April 2022 solicitor’s PII renewal season is rapidly approaching. It is more important to note that insurance companies enter and exit the market at an alarming rate.

Therefore, it is now the right time to begin your search for the best providers, PII premiums, and payment solutions that can protect your practices property and assets in the event of failure. As a result of COVID-19 variants making headlines and disrupting business, solicitors may face an increased number of professional negligence claims.

Market Overview 

Every year, the market for solicitors’ professional indemnity insurance becomes more volatile. A large part of the problem can be traced to the minimum terms required of insurers by the SRA, which has caused an unprecedented level of resentment. Because of this, many traditional PI insurers have stopped insuring solicitors.

There are fewer players in the market, so the level of competition has drastically changed, and insurance prices have been on the rise for years. More than 11,000 law firms in England and Wales generate over £250 million in premiums annually from the PII market.

PII premiums rise sharply

With annual premiums for solicitors firms in the UK rising by over 27% on average, there has been a significant decline in the number of insurers offering coverage.  Following the reduction in primary limits to £2 million in 2021, this trend is likely to continue for the April 2022 renewal season.

Personal guarantees demanded from SME firms

It’s not just rising PII premiums that present SME law firms with significant challenges. The market is also seeing an increase in the request for personal guarantees from certain insurers, putting solicitors at a higher risk than in the past. This is essentially a legal document that guarantees a director of a law firm will personally repay any debt the firm owes, even if they are forced to use their own home or other assets to do so.

Popularity of personal guarantee insurance

A new solution has emerged specifically to help protect law firms in the event of a loss of collateral following the growing demand for personal guarantees by insurers. Providing the coverage required to repay debt when lawyers do not have the available cash resources, Personal Guarantee Insurance (PGI) is an annual policy that lenders are offering to solicitors and SMEs.

Increasingly, solicitors are preparing for the likelihood of personal guarantees becoming a mandatory requirement to balance the risks of both parties. Therefore, firms looking for coverage should ask their insurance broker if they will be required to pay a PGI, as well as run-off premiums to fully understand what’s at stake in case of financial difficulty.

Requirements for Cyber Insurance

Additionally, conveyancers may have to purchase stand-alone cyber insurance as the SRA has clarified that the protection afforded by PII for losses incurred due to cyber security threats will only cover clients and third-party applications. A mandatory cyber insurance policy won’t affect minimum terms, however.

In conclusion

Professional indemnity insurance is most certainly undergoing huge change. The fact remains that PII remains a core policy for law firms seeking to protect their financial assets. Firms need to sit down and assess their risks in preparation for April 2022, looking for the best coverage available in the marketplace.

As the winner of Best Professional Indemnity Insurance Broker two years running, and Professional Indemnity Brokers of the Year 2019 we can help to arrange cover for your firm. We also provide risk management support to give you the assurance you need throughout the year.

Legal Ex Plus was established to provide professionals with tailored insurance products that suit their specific requirements. By drawing on our vast experience and applying our in-depth knowledge of professional services, we are able to design innovative insurance programmes for each of our clients. Contact our expert team on 08001804203 for a free no obligation quote.

Several high-profile insurers have withdrawn from the financial adviser market due to poorly performing accounts. As a result, the market for professional indemnity insurance has hardened. In a sector where so few insurers compete, there is less competition. Consequently, the remaining insurers have been able to increase their rates and return to profitability after suffering heavy underwriting losses in recent years.

 As a result, insurers are now more cautious if a company provides advice in high-risk areas. You could significantly improve your chances of obtaining competitive PI by following the tips below and also reduce your chances of seeing premiums rise.

Start Early

A number of factors can contribute to the premium and every business is different. Factors include; the firm’s fee income, risk profile i.e. types of products/investments they are advising on, claims history, experience and qualifications and the level of risk management procedures the firm has in place. 

Underwriters have different risk appetites, in which case they may adopt different rating structures, targeting specific types of firms.

The key to obtaining the most comprehensive cover at the most competitive rates is to start the research process early to review the market, ideally this should be up to three or four months before the renewal date. The earlier you start the process, the more time you and your broker will have to prepare a thorough and detailed application for the underwriter’s judgement. As a result, you will have more time to negotiate the terms and reduce the likelihood that the terms will be left to the last minute.

Various insurers have different terms and conditions, so giving yourself a bit of time will allow you to understand the coverage fully, so your decision is not based solely on price.

 Make the right impression

Filling out the forms neatly and accurately is important to creating the right impression. Additionally, providing additional information can help your insurer/broker understand your risk better. Including copies of your terms of business, complaints register, investment proposal document, and CV can be very helpful when submitting your proposal.

If you have had previous claims, describe what happened, what the company did to prevent reoccurrence, and the amount of the claim.

Demonstrate procedures for managing risk

Describe what your firm has done recently to reduce the possibility of a claim occurring, and provide copies of any recently updated documents. To get the best possible quote, make sure you make your proposal form stand out from the crowd; underwriters receive hundreds of applications.

Use a broker

Professional Indemnity Insurance is always best sourced through a specialist broker who is on the FCA list of approved PI brokers. In some cases, a managing agent functions as both an agent for the insurer and an agent for the insured.

In addition to carrying out a thorough investigation of the market, independent brokers can obtain quotes and negotiate with the various insurers available to them. Brokers can also provide additional claims management assistance, assisting you in dealing with your insurer if necessary.

Understand exclusions

Insurance companies’ IFA wording, as well as the terms agreed or quoted to the individual firm, will greatly determine any exclusions. An insurer’s standard policy wording will detail all of its basic terms, conditions, and exclusions.

There is a variation in IFA wordings between insurers, so it is important to understand and check the different options available to the firm. It is common for nonstandard exclusions to be applied as well. Recent additions to the list include Arch Cru, Key Data, Matrix and unregulated collective investment schemes. Insolvency exclusions are also used by some insurers, although the wording varies from one insurer to another. In order to avoid misunderstandings later on, it is vital to always check and understand these definitions from the outset.

In the last few decades the legal profession has changed almost beyond all recognition. New working practices, use of technology and new regulation by industry bodies have introduced both benefits and challenges. Most correspondence is via email now, clients have evolved to expect instantaneous responses and supervision has become more difficult as the industry has been forced into flexible and remote working, particularly since the Pandemic.

Law is a sector that often demands long working hours and excessive workloads, often resulting in stress and work-life balance issues. Studies into the legal profession both before and during the Pandemic found that high percentages of legal professionals had experienced mental ill-health, depression and low mood with many stating their sleep patterns were affected. Most agreed that their work was fast paced with tight deadlines and there was pressure from clients who expected them to be available 24/7. There is plentiful evidence to suggest that performance, and even IQ, is affected when we are under stress and not sleeping well.

Employers are beginning to shift the wellbeing agenda. Whilst most employees agree that they are individually responsible for their own wellbeing, a growing number argue that their employer is also responsible. Employee benefits and wellbeing teams are now commonplace and report the top concerns and priorities for law firms currently centre around improving and supporting mental health in the workplace, ensuring that benefits strategies meet the needs of post-pandemic workers and working on creating a culture which actively supports workplace wellbeing. Also on the list of concerns is working on recruiting and retaining top talent and improving diversity within the legal sector.

Over the past two to three decades not much has changed in the way in which PII underwriters assess the risk presented by law firms, that was until the Covid Pandemic hit in 2020. With all the surveys and coverage about wellbeing in the media, it is no wonder that this appeared on the Professional Indemnity Insurers’ radar. Aside from the usual business details required for law firms’ PII proposal applications including fee income, work split, claims history etc, in recent years insurers have begun to require additional information from applicants such as how they are managing remote working, financial stability due to lockdown and how they are managing their employees’ performance and welfare.

On top of an already hardening insurance market even prior to the Pandemic, there has been a marked shift in the focus of underwriters so that now, in addition to the traditional risk management metrics there is an increasing desire to understand the culture of law firms and what initiatives they are utilising to support the wellbeing of their employees.

It is fair to say that it is only in recent years, perhaps ignited by the Pandemic, that the legal profession has begun to give any attention towards mental health and wellbeing within their own workplace and whilst there is arguably now a greater level of awareness, there is still much to be done on this front. Partners and senior level staff in managerial or supervisory roles have a duty to be alert to the warning signs of their employees state of wellbeing. Signs to look out for include a decline in an employee’s performance, uncharacteristic behaviour and symptoms of distress. It is important that if signs are spotted, firms have mechanisms in place to be able to respond appropriately by providing support to the employee in the form of allowing time away from the workplace, adjusting workloads and providing access to external counselling services for example.

It is recognised that mental health and wellbeing can be a catalyst for PII claims as it is invariably process or judgement issues that ultimately lead to a claim such as failure to record facts accurately, missed time limits, lack of supervision or failing to seek assistance. When an employee is tired, anxious or stressed their performance is affected; shortcuts are taken, diary dates are missed and employees may not want to ask for help as they may feel it reflects upon them negatively.

Many law firms will advise their insurance broker that they operate an open-door policy where employees are able to freely raise concerns or issues, however the question must be asked as to whether this is the real perception of their employees. Does the culture of the firm actively encourage employees to report concerns about their workload or personal health and wellbeing, and is that culture felt across the whole practice from top down?

The measure of the effectiveness of an open-door policy is whether employees are regularly engaging with management to raise queries and discuss their concerns. This also manifests in the notifications made to insurers; if a firm makes precautionary notifications in a timely fashion throughout the year, this would indicate that there is an open and supportive culture, which is in contrast to one which only notifies after a matter has been escalated to a claim which denotes that perhaps colleagues were reluctant to seek help at an early stage. These are the signs which underwriters are now placing greater value upon when assessing risk therefore it is imperative that firms understand the changing nature of the industry and adapt accordingly to ensure they do not suffer adversely when PII renewal time next comes around.

The SRA are now inviting views from within the legal industry regarding options to replace the SIF (Solicitors Indemnity Fund) and PSYROC (post six-year run-off insurance cover).

PSYROC is an additional cover for law firms that shut up shop without a successor practice, on top of the six-year run-off cover provided by their standard professional indemnity insurance. Up to now this has been provided through the SIF, which is a mutual indemnity scheme itself in run-off since 2000.

Since the SRA assumed responsibility for the SIF following its establishment in 2006, it has agreed on three separate occasions to extend the provision of PSYROC through the SIF due to concerns about its affordability. The latest extension, bringing it to 2022, was agreed to allow more time to consider longer-term options in relation to PSYROC.

The role of the SRA is to work in the public interest and the regulatory body is constrained by law from acting outside their regulatory remit or for the purpose of supporting or protecting members of the profession. After carefully considering all of the evidence, including analysis from an independent expert review, the SRA are now consulting on whether their regulatory arrangements should include PSYROC as a consumer protection, and what that might mean for the future of SIF.

The consultation paper sets out a scale of options for discussion; firstly: zero future provision of post six-year run-off cover. Secondly; continuing post six-year run-off cover with new funding arrangements through different models, and thirdly; arranging post six-year run-off cover through insurance on the open market

The open consultation invites views on these and other arrangements, explaining that the SRA’s preferred option is not to continue the provision of on-going PSYROC based on the ratio of cost to volume and value of claims, which is not likely to be the most efficient way of delivering the best consumer protection.

Forecasts indicate that looking over the ten years from 2023, the number of consumers that would be likely to benefit each year would only be around 30 in number, with the average value of claims paid out, including defence costs, at just over £34k. The requirement for ongoing funding from the profession is estimated to be up to £2.4m a year, and that cost is likely to be passed on to consumers which is not good news for consumers.

The consultation will also consider what should happen with the remaining reserves of the SIF if it no longer provides PSYROC, particularly that transferring the residual funds to the Law Society would allow the society to use them for the benefit of the profession.

The SRA Board have explained that they understand the issue is controversial and that there are likely to be a variety of views. The SRA are running the consultation period for 12 weeks with a closing date of 15 February 2022 and assure all interested parties are assured that the board will carefully consider all feedback before making a decision.

Despite the unprecedented difficulties over the last 18 months, smaller law firms appear to have survived the pandemic quite well so far, but there is a very real concern that increases in the cost of professional indemnity insurance (PII) may ultimately push them out of the market place.

Smaller firms have indicated a high confidence in the future for their businesses, whilst recognising significant threats such as the continuing demands of compliance and the need to attract and retain good lawyers.

However all firms have seen a rise in PII, mainly attributed to the increased risk during the pandemic and a less competitive market due to more insurers leaving the PII market in recent years. And whilst it is somewhat expected that PII costs do typically rise every year, recently small and SME firms have seen an average increase of around 30%.

The Law Society had warned the sector of expected increases of around 30% which have been realised. The legal profession is already operating in a hard market however the situation is compounded by a significant minority of firms making claims which exceed the premiums raised by insurers, a scenario which is not sustainable.

It is essential for firms, particularly those engaged in conveyancing work, to take steps to review their risk management practices. Residential conveyancing remains the highest area of claims for most PI insurers, areas of concern include ground rent clause disclosure and complications around multiple dwellings relief from SDLT and other aspects of SDLT reliefs. Some insurers have become concerned about the sudden increase in fims’ workload since the re-opening of the market post pandemic.

Remaining key to defending claims is effective communication with clients, good supervision of staff, ongoing training for staff and fee earners, particularly when working from home and this is what underwriters are looking for.

If you are seeking to renew, it may be helpful to be able to present a record of your experiences of working through the pandemic including details of how you’ve overcome the negative impacts to make you firm more operationally resilient. Being able to present a concise record evidencing the steps you have taken to manage risks could give you the edge upon renewal.

If your firm has had a significant uptick in the number of transactions of over 15%, the insurer needs to be notified as should significant changes such as new partners or new areas of work to ensure there are no surprises when it comes to renewal time.

We are specialist providers with extensive experience in arranging Insurance for firms of all sizes. With full access to participating insurers and flexible policies tailored to your needs, we have specialist knowledge to help you get the right cover and can offer risk management advice & support with year round risk management advice & support. Call us today on 0800 180 4203