Solicitors Professional Indemnity Insurance

Blackfriars has a long association with the solicitors’ professional indemnity insurance market. Our professional indemnity insurance team is headed up by our Professional Risks Director, Paula Johnson, a full time solicitors professional indemnity broker with over 20 years experience.
When our brokers visit solicitor clients in advance of the annual renewal, they are sent away with literally bags full of marketing from brokers and it is little wonder you won’t take calls! It is a maelstrom, no other word for it, totally hampered by the need (albeit understood) to have the common renewal date.

If you would appreciate an alternative option, all we can say is, we know this market very well indeed and, being independent, we can access several insurers for you, subject to their individual criteria – and we’d be happy to help.

Firms with 2+ partners, click here to obtain your proposal.
Sole Practitioners, click here to obtain your proposal.

The 2007 Solicitors’ PI season demonstrated, yet again, a continuation of the annual decline in terms of premium spend but this is viewed by many as ‘unsustainable’. It is felt that a necessary rating correction must take place at some point – but when is the question?

Generally the professional indemnity insurance market (and this is not limited to the PI market) is awash with over capacity, with supply out-stripping demand and no abatement to the numbers of new entrants wishing to participate, thus driving prices lower and lower. At the smaller end of the market there are some, frankly, incredible deals around, leaving us ‘open mouthed’ with shock in readiness for what we may encounter next. We have seen, recently, the odd exception in the financial and mortgage broking sectors – and the Royal Institute of Chartered Surveyors has recently reported that Professional Indemnity Insurance premiums are likely to increase for their members, as insurers are quietly nervous there will soon be another epidemic of claims arising from an, as yet, unknown source.

What about solicitors’ professional indemnity?

In 2007 there were 27 Qualifying Insurers and 24 of them participated. The total premium spend dropped to about £204.6 million, although insurers have until 28/2/08 to declare the 2007 PI revenue so this may change. It settled at around £221 million in 2006 and the spend for 2005 was £244.8 million. The insurer with the highest participation value in 2007 took £38 million in premium (down from £44m in 2006) and there were notable gains for two insurers, at the expense of several. The ‘several’ may, in any event, have been intending to consolidate – indeed will they participate in 2008? Considering the potential for large claims, as they must, alongside the ‘long-tail’ nature of this type of insurance, many of the ‘several’ simply may not have enough ‘in the (direct) pot’. It remains unlikely that we will see a rush of new entrants in 2008 for this class.

Rates have continued to fall since the cessation of the Solicitors Indemnity Fund (SIF). The continuing decrease does cause alarm and if this market reacts as the RICS predict (there are always similarities), pressure will come to bear and the cycle may reverse; the falling rates will become ‘unsustainable at some point.

So what for 2008? Will we see another very competitive year? The 2007 figures certainly didn’t give any indication of the market hardening in the short term but things can and do change, often dramatically and often quickly, so look to the medium term, we say. Insurers are finalising strategies at the present time and we’ll know more soon.