Moving back the 1 September date for solicitors' PI renewals hasn't helped insurers.
In years gone by, as 1 September - the date for solicitors' professional indemnity (PI) renewals - approached, most lawyers were to be found sunning themselves in foreign climes. Worrying about renewing their PI cover was the last thing on their minds, to the frustration of underwriters and brokers. Last year, in an attempt to find a solution to this problem, the decision was made to move the 2004 renewal date to 1 October, in the hope that lawyers would be back from their holidays and ready to address the issue of renewing their PI policies. Unfortunately, for underwriters and brokers, it seems the date change was in vain. "It's moved the rush back a month," Zurich Professional head Dave Coughlan says. "We've been providing quotes since early July but we're broadly seeing the same pattern. We'll still see firms leaving it until the last minute."Alexander Forbes executive director Trevor Moss has noticed a similar trend. "Some firms have seen the 1 October renewal date and have gone away on holiday," he says. And PI Direct chief executive Michael Wood says that, while the change of renewal date may have assisted solicitors, it was of little benefit to underwriters. He says: "It [the date change] has helped the profession, but it hasn't helped us much." Attempts to persuade law firms to renew early have, generally, proved futile. Like Zurich, PI Direct gave solicitors the opportunity to renew cover well in advance of the October deadline. But the success of the strategy was limited. Of the firms offered early renewal terms by PI Direct, only 20% have agreed new deals for the coming year. Yet brokers are pleased that at least some law firms have been proactive when dealing with their renewals. "A reasonable amount of the profession has renewed early", Moss says. He adds that a number of firms have got into the habit of renewing cover in time for 1 September and have simply carried on the routine of previous years, with the result that PI cover has been renewed one month early this year. "Certain law firms have got into the habit whereby they've always done their renewals around now," he says.For the leading global law firms, the new renewal date has made the process of buying PI cover run a little more smoothly. DA Constable Syndicate 386 underwriter David Harries says: "For large law firms, the date change may have made it easier, because at the end of the process the firms get in touch with the partners to check that all the information provided is accurate. In previous years, the partners may have been on holiday at this time."However, the encouraging sign for brokers is that the recent influx of capacity into the market has meant that underwriters are on the look out for new risks. Moss says: "It's different this year in that all insurers have an appetite for new business."
PI rates steady, but upswing forecastRates are expected to hold up despite PI capacity flooding into the market over the past 12 months, say brokers. Abacus Syndicate 2526, Catlin Insurance Company and Navigators are a few of the insurers to have joined the Law Society's list of qualifying insurers since September 2003. But brokers feel that PI rates will remain stable."One or two insurers are being more aggressive as they try to get business on their books but we're not seeing swingeing changes. There are not vast differences in price," Moss says."There are a few new players that are dipping their toes in the market, but they're not creating too much of a ripple."Some argue that rates will go up this year. Zurich Professional head Dave Coughlan says: "There's been an increase in the number of qualifying insurers, but we're seeing an upward push in rates across the market - an increase of 10%-15%."The upsurge in rates means some law firms will be considering changing their PI insurer at this year's renewals. "There are firms that have renewed early, but there are also those that are saying there is volatility in the market and they want to test the market out," says Alexander Forbes executive director Trevor Moss. Though smaller law firms may tend to shop around as the deadline approaches, the global heavyweights have a tendency to be more loyal to their underwriters. DA Constable Syndicate 386, which provides PI cover for a handful of the largest international law firms, notes that the bigger players in the legal market are less price-sensitive when it comes to buying cover. "The large firms pay substantial premiums and are less influenced by market forces because they value the relationship with their lead underwriter," says DA Constable underwriter David Harries."The larger firms all want to know what rates are available out there - with some staging beauty parades."But they tend to take a long term view. They're not fickle buyers, they want the best cover not the cheapest. They want to test the water but they're not price driven."
Law Society insurersAbacus Syndicate 2526 Catlin Insurance CompanyHiscox Insurance CompanyHiscox syndicate 33Liberty MutualMJ Harrington Syndicate 2000NavigatorsNewlineNorwich UnionQBERoyal & Sun AllianceSt PaulSVB WR BerkleyZurich ProfessionalLargest solicitors' primary layer PI insurers by 2003-04 premium income:Zurich £67.4mSt Paul £47.7mQBE £43.9mNorwich Union £21.7mAIG (Europe) £15.4mHiscox Insurance £13.7m Royal & Sun Alliance £11.6mWR Berkley £11.5m