Last year just five per cent of solicitors’ practices took the opportunity to move their professional indemnity insurance renewal date from 1 October.
Figures reported in the Law Society Gazette show that only 433 of about 10,700 firms took up the option to select a new renewal date. The main reasons for changing were reported as avoiding the 1 October ‘scrum’, aligning renewal with the firm’s year-end or with the end of the calendar year.Of the 433 law firms which took up the option, 26 went for a shorter policy term to set a new date for future renewals. Eight opted for the calendar year-end and 135 with the end of their financial year. The most popular date was the end of February, chosen by 247 firms due to the availability of a 17 month policy from Travelers Insurance.
Choosing a different renewal date to 1 October has advantages and disadvantages. On the plus side it offers firms greater flexibility to choose a date that works well for their business. This may be a calendar or financial year-end. It also means they can discuss their renewal with their broker at a quieter time in the market, when insurers may have more time to consider their proposal in detail.
On the down side, a longer term policy will cost more upfront, requiring a higher level of financing. Some also argue that insurers will be less focused on the solicitor’s sector away from the traditional renewal period and may offer less competitive terms.
At present it is unclear whether choosing a different renewal dates will make it easier for firms to renew. Andrew Darby, financial protection consultant told the Law Society Gazette “There are arguments both ways. Having a single renewal date can mean all insurers are in the market and hungry for business. The counterargument is that, because everyone is trying to arrange their policies, brokers and insurers can be stretched and it can be chaotic for firms.”
According to James Burgoyne, Director – Claims & Technical, Brunel Professional risks, the key to a successful renewal is to present the firm to insurers clearly and in detail – and a move from the 01 October may be appropriate for some firms. “The common renewal date shackles firms to the economic cycle of the solicitor’s insurance market, whether it is up or down. This can be good news for bad firms, as they can secure better rates regardless of their individual merit, or be lost in a crowd. However the best firms with clean claims records and evident commitment to risk management struggle to differentiate themselves from the crowd. The logistical pressures created by the common renewal date mean that it is difficult for an underwriter to spend time truly understanding a firm and appreciating its individual features.”