Are you ready for October renewals?

5 Sep 2023

PII market conditions are on the rise as we look ahead to the October renewal season, as we close out summer and make it to the halfway point in the 2023 calendar year.

Almost all major participating insurers are eager to expand their portfolios with new business. In addition, new capacity is expected to enter the market by October, so firms with a desirable profile will have even more options at renewal.

Although some insurers increased rates during the now well-populated recent spring renewal season - albeit modestly as compared to recent seasons - the majority of insurers' rates plateaued. It reflects a positive dynamic in the PII marketplace, with more active competition for business. A limited number of extended policy periods also became available again.

Even so, this represents a sea change from recent years. The only slight irritation of the spring renewal season was the cost of borrowing, which increased throughout the period due largely to macroeconomic factors. In addition, financial institutions were strengthening their due diligence processes, which adversely affected loan decision-making and processing times.

As the October renewal approaches, we expect due diligence to become even more rigorous. Well-run practices can expect to see a softening of rates come October, due to the emergence of new insurer capacity and an increase in appetite among existing insurers.

How diluted rates will become is yet to be determined. Additionally, insurers are likely to offer longer policy periods once again, with some portfolios offering up to 18 months. While this PII update has a positive tone, one caveat must be made: dilution of rates does not necessarily equate to a dramatic drop in premiums.

Rising inflation has fuelled an increase in fee income for many firms, affecting premiums charged by insurers. As a result, well-run and successful practices shouldn't see their profit margins further eroded by PII premiums, as perhaps they did at recent renewal periods. A softening of rates may not have a positive impact on the entire English and Welsh legal profession.

Those practices experiencing adverse claims positions and those heavily involved in high-risk practice areas are particularly susceptible to this. Regardless of their profile, practices cannot afford to be complacent, and can't expect premiums to fall without effort. The importance of providing your chosen representative(s) with appropriate evidence to present to the underwriters in order to justify applying a positive price adjustment cannot be overstated.

To capitalize on improving insurance market conditions, we recommend that you begin your renewal process early. It is recommended that you provide the presentation six to eight weeks before renewal. Because the process is longer and terms may be more favourable, you should begin exploring finance options earlier than you did previously.

Ensure that your presentation provides a positive reflection of your practice by spending the time to prepare a quality presentation. Around two-thirds of the legal profession in England and Wales renews at the end of September, so you will compete with a large number of your peers for attention from underwriting teams. Despite insurers' increased appetites for business, their underwriting teams may only have a finite amount of time for risk assessments, and will not want your information piecemeal. It is unlikely that an underwriter wants to read the entirety of your office manual, but they need to be confident and, more importantly, have the required evidence to invest their company's money in your practice. Renewal presentations are essentially your shop window for insurers, which is why they must be used properly.

Our recommendation is that you make sure that your practice stands out from the crowd. When you have experienced claims, describe the situation and explain what measures you have taken to prevent their repetition. A statement stating that the person responsible for the claims has left your firm may not be enough for insurers.

The most important thing you can do as part of this opportunity is to help your chosen representative(s) educate insurers about your firm, what you do, and how you do it. It is important to keep in mind that specialist underwriters are not solicitors, and therefore may not fully understand the nuances of your specialization, even though they understand risk and ramifications. Additionally, each practice is unique, so tell your audience why yours is better.

Choosing your representative(s) wisely will help ensure that the good work you have done to present your practice in a positive light does not get diluted by scattering your presentation across too many sources. A large number of leading insurers operate on a limited-panel basis. Consequently, you may not be able to reach all of the active participating insurers directly, which may result in you not achieving the best possible solution for your practice. If you exclude half of the active participating insurers from an improving PII marketplace, you will not truly benefit from it. Establish which insurers the representative(s) can approach directly before selecting them.

Consult your representative(s) to confirm that these insurers are also interested in practices of your size and profile. Direct access will also eliminate unnecessary links between you and the insurers, ensuring that your message won't be diluted or lost in translation. Legal Ex Plus would welcome the opportunity to canvass the PI market on your behalf.

We have direct access to active participating insurers along with exclusive insurer solutions that no other representative can provide. If you are interested in following up with Legal Ex Plus to discuss maximising the benefit of an improving PII marketplace, call us today for a free quote on 0800 180 4203.