Solicitors’ PII – 1 October renewal in progress

The insurance market is now open for the 1 October renewal of solicitors’ professional indemnity insurance (PII).  This is a challenging renewal for law firms given the combination of a hard market and the impact of Covid-19.

The majority of law firms still renew their PII on 1 October and are currently engaged in the process of completing proposal forms and sourcing quotes. Firms that renew their PII on other dates will also be watching developments closely, so that they know what to expect when it is time to renew their cover. This is the story so far:

  • It has been a slow start to the renewal process with insurers taking time to settle changes to their proposal forms and produce questionnaires related to the impact of the Covid-19 pandemic. Some insurers have also taken more time than expected to settle their rates, which has likewise contributed to delays. Firms that have not yet completed their proposal form should do as a priority. It is important to remember that the future of your firm depends on your PII renewal.
  • Proposal forms are longer this year and will take more time to complete. We have seen an increase in questions directed towards buyer-funded developments and other property investment schemes. The claims activity arising from these transactions is a particular concern and insurers are keen to understand the extent to which firms have engaged in this work.
  • Most insurers have also introduced additional questionnaires relating to the impact of Covid-19. The questions cover issues such as the effectiveness of contingency plans, risk management initiatives adopted to respond to remote working, staff arrangements, cyber security and the financial position of the firm
  • The financial stability of firms is a key issue for insurers this year. They are particularly concerned at the prospect of firms failing in the next 12 months which will trigger the requirement to provide run-off in the event that a successor to the firm cannot be found. Insurers are obliged to provide the cover whether or not the firm is able to pay for it. Firms can expect that the financial information they provide will be scrutinised more closely than it has been historically.
  • As far as premiums are concerned, this is the hardest market for solicitors’ PII since the profession moved their insurance arrangements from the Solicitors’ Indemnity Fund to the open market. Firms that have yet to receive a quote should prepare themselves for an increase in premium.

The Law Society president, Simon Davis, has recently been quoted in the legal press saying that firms should expect increases of up to 30%.

However it is not a case of “one size fits all”. Every firm has its own unique characteristics and premium increases will differ depending upon issues such as a firm’s areas of practice and claims history. Insurers will also differ in the rate increase that they need across their portfolio. It is important for firms to engage with their broker to discuss the potential premium increase to expect.

  • Insurers have a reduced appetite for new business, particularly when it comes to firms that engage in conveyancing work – which is the majority of the profession. Insurers are nervous, due to both the existing claims from conveyancing work and the prospect of further fall-out following a crash in the property market as a result of Covid-19 and Brexit. Some insurers are not prepared to consider new business cases where the firm undertakes more than 20% conveyancing. This means that it can be very difficult to source an alternative quote for a firm that wants to compare the terms offered to them by their existing insurer with a quote from another insurer.
  • It is expected that there will be an increase in firms wanting premium funding arrangements, given that there is more pressure on cash-flow than there has been historically. Premium funders are also asking more questions as a result of Covid-19 issues and firms should expect that there will be rigorous scrutiny in advance of funding being agreed. Again it is important that firms allow enough time for this part of the process and start to consider their options as soon as possible.

As a broker we are acutely aware of the difficulties that the profession faces with regard to the current PII renewal. We recommend that firms stay engaged with their broker, respond promptly to any requests for further information and ensure that they provide insurers with the best possible presentation of their firm. As discussed above, financial stability is a key issue and firms should ensure that they engage with the appropriate professionals if assistance and advice with regard to the financial position of the firm is needed.


This article was produced in collaboration with Jenny Screech, Consultant from Howdens


If you are interested in discussing anything covered in this article please make sure to get in touch with a member of our professional practices team on 01772 821 021 or email your inquiry to info@mooreandsmalley.co.uk.