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.