The insurance market for solicitors’ professional indemnity (PI) is becoming increasingly fragmented for small and medium sized law firms, according to Marsh.
The global re/insurance broker has said that the split has widened.
Marsh’s UK, professional liability placement leader, Michael Morgan, explained that this “wider market uncertainty” is subsequently prompting many insurers to review their books of business, adjust their capacity, or withdraw from sectors that they perceive as high risk or no longer profitable.
He said: “Small and mid-sized law firms in England and Wales that are perceived as “high risk” by insurers are bearing the brunt of any premium increases in the primary insurance market this year.”
Up until 2014 all law firms renewed their PI insurance on the same day every year, October 1st , but this system was abandoned.
And although many solicitors still stick to renewing their insurance on that same date in October as it appears to have become tradition, new solicitors are free to arrange and renew policies at anytime through out the year.
Marsh reported that the primary insurance market for solicitors’ PI risks is “well-capitalised and competitive.”
It said that there is some “upward movement in pricing in the excess insurance market,” which provides cover for small and mid-sized law firms above compulsory levels.
And that some insurers are applying “greater rigour” or being increasingly selective in re-pricing risks, in a bid to limit their exposure.
But John Kunzler, senior risk adviser, law firms practice at Marsh, highlighted that in order to secure PI insurance at “reasonable terms,” small and mid-sized law firms should begin their renewals in “good time and demonstrate that they have robust risk management processes in place.”
Marsh highlighted that reductions are mainly limited to those small and mid-sized law firms with very few or no incurred claims, or lower risk areas of work; firms that have claims relating to cyber breaches or identity fraud which are more likely to experience premium increases.
Last week Marsh bought JLT in a $5.6bn deal, it affords the re/insurance broker the opportunity to expand its products and geographic footprint while making cost savings. It leaves a combined 5% of jobs at risk in both firms.
Earlier this month the firm announced the appointment of a new chief executive of its UK corporate division, Alistair Fraser will take over from Joe Grogan who will assume the position of chairman of Marsh Ireland.
Last month the re/insurance broker launched an insurance solution to assist small and mid-sized law firms in England and Wales, to manage PI risks.
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