Covid and Brexit are expected to have an impact on an already hardening market
Solicitors have been warned to ‘act now’ to mitigate soaring prices for professional indemnity cover expected as the traditional 1 October renewal date approaches.
The impact of Covid-19 and Brexit are thought to be pushing up rates in what was already a hardening market, said the Law Society’s president Simon Davis.
He warned that it could be “the most challenging period for solicitors since the insurance market opened up in 2000”.
“Firms should brace themselves for an average increase of 30%, but those with bad claims histories should expect far higher increases.
“First and foremost, firms should already be talking with brokers about finding cover. If you have not done so, it should be made a priority now,” he said in a statement.
“Insurers are reluctant to take on new risks just now and many are not seeking new clients.
”This cautious approach means firms will be expected to provide more information up-front, such as details about risk management, firm finances, continuity planning and evidence of ongoing profitability.
Davis also suggested there would be questions about how Covid-19 has affected the business, redundancy plans, use of the furlough scheme, home worker supervision and risk mitigation steps.
The Law Society is predicting that “almost all firms will see increases in their premiums this October”, especially those exiting an 18-24 month policy.
Davis advises firms to look into premium finance options to spread the up-front costs over the year to help with cash flow, or subsidised loans via the Coronavirus Business Interruption Loans Scheme.
1 October is the common solicitors’ PI renewal date, which often leads to a bottleneck as underwriters and brokers rush to meet the deadline.