Signing long deals now is “foolhardy”, says JLT partner
JLT has slated the rise of two-year solicitors’ professional indemnity (PI) insurance contracts and warned that these could end up costing law firms more money.
These two-year contracts are now being offered by insurers such as Ink-owned Indemnity Risk Solutions, and have come about because of the end of the costly assigned risks pool (ARP) from this year’s renewal date.
JLT Speciality partner Mike Perry said that these contracts were appealing to solicitors because they offered peace of mind for two years and less renewal hassle, but warned:
“However, as everyone is currently contributing towards the cost of the ARP, it is very possible that premiums will drop for many solicitors next year, and two-year deals are simply a way of locking clients in at a potentially higher than market price.”
Perry said that the demise of the ARP will change the market, and added: “With this imminent change being locked into a deal for a two-year period seems foolhardy, particularly if the insurer offering it is one without a credit rating.
“JLT is providing competitive quotes for quality firms specifically designed to be realistic and sustainable for the long term, which is, in our opinion, a more sensible approach.”
Other broker sources have also criticised these contracts and claimed that they are simply a money-spinning device designed to set a guaranteed two-year premium if solicitors’ PI rates soften next year.
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