Most firms able to renew PII says survey
The annual survey of solicitors’ PII experiences undertaken by the Law Society has revealed that, notwithstanding the difficulties experienced by many of them, the vast majority of firms were able to renew their insurance last October.
Not surprisingly, however, the findings have also revealed that for smaller firms (especially those with unrated Latvian insurer Balva) the renewal experience was particularly difficult – not helped by the fact that XL, previously the largest PII insurer, had all but withdrawn from the PII market.
Amongst the findings of the survey were that:
- The number of law firms renewing their PII with their previous insurer fell by 11 per cent from 94 per cent last year to 83 per cent this year;
- Of firms finding the renewal process difficult, 14 per cent linked this to insurers withdrawing from the market or ‘going bust’;
- Despite an increase of awareness of the Law Society’s campaign on the importance of considering an insurer’s solvency, unrated insurers managed to increase their market share to 22 per cent of all firms.
- Cost remains by far the most important factor in decisions about which insurer to use with smaller firms still spend a greater proportion of their gross fee income on PII than larger firms;
- 11 per cent of firms postponed their decision to retire because the process was too expensive. The cost of run-off cover varied typically between 200 per cent of annual premium to 300 per cent, though instances of 600 per cent were also reported.
Almost one in twenty firms – most of which were small firms – reported entering the extended indemnity period (EIP) with one per cent going on to enter the cessation period.
Law Society president Nicholas Fluck said:
‘We will continue with our campaign of education and support for firms. By purchasing PII you are buying a claims service, so you need to ask yourself whether this will be available to you in the event of a claim made against your firm. As many former Balva firms are now acutely aware, the consequences of not checking the financial strength of an insurer before purchasing their PII policy can be significant.’