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PII – “What, already?”

Here we are again.  It’s early May and once again our attentions are turning to the solicitors PII season. “Already?” I hear you cry – well, in our opinion, now is the time to start preparing your strategy for 2014. 2013 serves as a timely reminder of the benefits of starting early.

So what of 2013? Was it another unusual year? Well the only certainty surrounding the solicitors PII season is the uncertainty. Every year there seems to be a new set of peculiar issues which contrive to cause maximum confusion, worry and uncertainty, and last year was no exception.

The end of the ARP was cause for optimism as it was predicted that new entrants would be attracted to the market. However, the Balva/Berliner fiasco and XL’s exit created a vacuum for the smaller firms that insurers weren’t prepared to fill. The inevitable consequence of this was that firms that left it late to renew their cover were often faced with an increase, whereas firms that had concluded negotiations early achieved pricing stability and in some cases reductions in premiums. Overall, there was a shift to the quality markets as Travelers re-established themselves as market leader closely followed by QBE, yet unrated insurers still accounted for over 20% of the market.

The market experience of Quinn, Lemma, Balva et al should act as a warning for lawyers considering using an unrated Insurer and indeed, as placing brokers, we would never recommend using an unrated Insurer if an alternative rated insurer is available. However, a paradox exists whereby the unrated insurers have helped keep premium levels lower than they would have otherwise been. This has been recognised by the SRA, who have now dropped their proposals to insist on a minimum rating, but the paradox goes further in that the minimum terms and conditions were designed to create consumer protection, yet it is the very breadth of terms that have prevented insurers entering the market, which is actually a threat to legal firms and ultimately consumers.  Insurance should transfer risk – not create it!

Turning our attention to 2014, what are our expectations? Once again there is some optimism but it is essential that firms act early. Insurers will still want to deal with well managed firms who can demonstrate a positive approach to risk management and this is particularly true for firms with four or more partners. Conveyancing will continue to cause concern and insurers will now be more focused on a firm’s financial position and succession planning, as insurers are obliged to provide run off cover for six years should a firm fail.

At this juncture insurers haven’t yet shown their hands and indeed the market will develop in the coming weeks. Whilst you cannot control the market, you can take steps to ensure you get the best possible result.


You should be meeting with your broker as soon as possible to agree a strategy.  You should have a clear picture of the markets you want to deal with and a realistic understanding of the possible outcome. It’s essential that information is gathered from across your firm with a view to completing your proposal by no later than the end of June. Your proposal and supporting data should then be submitted to your insurers with a view to agreeing terms by the end of July.

No doubt there will be many twists and turns in the weeks ahead and we will keep you posted with regular market updates.

ProAktive Solicitors Team.

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