?Hiscox is prepared to see its solicitors’ professional indemnity (PI) book shrink further this year, claiming it will no longer accept new clients and would let existing firms walk in a bid to maintain premium rates.
With the renewal season approaching on 1 October, Hiscox said it had considered exiting the market but had decided against it so as to provide cover for clients.
Gary Head, director of the insurer’s professions and specialty commercial division, said the company was prepared to lose clients in order to hold rates.
He said: “We won’t drop rates, even at the risk of losing companies, and if they choose to renew with us that’s fantastic.We are in the business to make money.”
The insurer has been quite outspoken about the solicitors’ PI market and took the bold step several years ago in raising premiums despite severe competition because it felt the rates charged were inadequate.
“We won't drop rates, even at the risk of losing companies
Gary Head, director professions and specialty commercial division, Hiscox
The move cost Hiscox about £300,000 worth of business and plunged its market share from 8% to 0.1%. Head said Hiscox has instead been focusing on areas within the private indemnity market it felt was more profitable, such as the IT sector, charity organisations and alternative medicine.
“IT consultants did research a year ago that said about 45% of IT firms don’t purchase PI insurance so there is massive potential there.”
Prior to the market opening to the insurance industry in 2000, the Solicitors Indemnity Fund (SIF) had a premium pot of £250m.
Last year, despite a significant increase in work taken by solicitors, the amount collected by the open market was £210m, said Head. He added that the appropriate premium spend should be £400m to £500m.