|
Market Update
|
International - Solicitor's Professional Indemnity
Printable Version
|
As of the October 1 renewal date, there are concerns about the appetite of
insurers to continue to underwrite professional liability for the profession. Many
of the existing qualifying insurers continue to move away from sole practitioners
and two to three partner practices, as their claims experience has shown that, on
the whole, these firms are unprofitable.
There are already many examples of steep premium increases this year as insurers
adjust their rates to reflect the deterioration of claims, especially for conveyance based
firms or those with a high exposure to commercial work.
There are, however, new entrants who are looking to gain a foothold in this
market and secure a piece of the £226 million pot of premiums. These new
insurers will temper the rates that the established insurers wish to charge. On the
other hand, new qualifying insurer Allianz only wants to write £10m of premium
income (circa 5 percent of the market) and only for those firms with four partners
or more.
An existing qualifying insurer, International Company of Hannover (AA- rated
insurer which is one of the best credit ratings on the panel of “qualifying
insurers”) has partnered exclusively with Lockton and agreed to write a significant
book of business. From the quotations provided so far, they appear to provide
welcome relief to the general hardening of rates with especially competitive prices
for those firms with a good track record.
Insurers have seen a significant increase in claims involving mortgage fraud and lender claims, and it is these firms who will be hit
the hardest.
Timing to secure quotations from qualifying insurers is going to be crucial this year. Those firms who waited until the last minute
to get a good deal may have done well in a soft market, however, the market dynamics are changing, and this strategy is more risky
than ever. Last year we saw a number of insurers change their underwriting approach in their target market. This means that a firm
who assumes they will renew with their current insurer could be caught off guard. If that insurer has changed its rating model for a
certain profile of a firm, the premium may increase significantly even if that firm has not had any claims themselves.
The prospect of insurers not willing to continue to write unprofitable business will lead to a significant increase in the number of
firms in the Assigned Risk Pool (ARP). Some insurers are predicting a four-fold increase in the number of firms in the ARP.
Finally—choose your broker carefully and take care over the proposal form. The manner in which your firm is presented to the
market will have a significant bearing on how well you fare.
|
Please contact your Lockton Representative for further information regarding any information contained in this
market update.
|
|
|
|
