PII for solicitors has attracted many column inches in recent years. Premiums across the profession are a multiplier of those paid by other professions. Insurers are in short supply.
And so, at face value, the news that premiums fell overall in 2012, from £255.7M to £239.3M is to be welcomed. But a note of caution is necessary here. The fall in premiums is perhaps due to extra capacity in the insurance market rather than an improvement in overall claims experience.
More worryingly, some of the new capacity is un-rated. In 2012 un-rated insurers accounted for 12.3% of the solicitors PII market. At ProAktive, we actively promote those insurers with excellent ratings from the likes of Standard and Poor.
If your insurer fails (as happened to Quinn and more recently Lemma) you face buying your PII for a second time in the year, in a distressed market with premiums to match. If you are unfortunate to have a claim in progress you will be uninsured. Some relief is available from the Financial Services Compensation Scheme but not for businesses or sole traders with a turnover exceeding £2M.
Will premiums reduce further in 2013? Time will tell. What we do know is that those who claim less, pay less. Claiming less is usually the outcome of good risk management. And above all, keep your head in a crisis. Insurance is simply a promise to pay for some future event. Better that your insurer is there when needed. The Quinns and The Lemmas were a lesson to many.
At ProAktive, our solicitors PII team have their finger on the pulse. Please feel free to speak to us about any issue that might affect your PII.
By Ian Laycock