Premiums up 100% for some smaller firms claims Marsh
Marsh has claimed the 1 October renewal deadline for solicitor's professional indemnity insurance saw another year of competition-driven reductions in rates for the top law firms across England and Wales.
However, while the market continues to remain soft for larger firms, Marsh has noted that some areas for small and medium sized firms have hardened. Firms with less than five partners and sole practitioners involved in conveyancing, particularly those with conveyancing-related losses, have experienced premium increases in some instances of up to 100% this year.
Commenting on the hardening conditions for smaller firms, Andrew Jackson, a managing director in Marsh’s UK Professional Indemnity Practice, said: “The downturn in the property market and rising mortgage fraud is fuelling these increases. Also, it is evident that a number of smaller practices still have not yet found cover in the open market because they are either late in doing so or because they cannot obtain a quote due to the reduced capacity in the marketplace, therefore ending up in the Assigned Risks Pool. We are seeing more small firms in this situation this year than in prior years.”
Meanwhile, at the top end of the market, larger firms still enjoyed the benefits of the soft cycle, although there are signs that these conditions may change over the next 12 months.
Sandra Neilson-Moore, European practice leader for law firms’ professional indemnity, at Marsh said: “The market for law firms at the larger end of the spectrum remained soft. We saw rating reductions of on average 15% and for some specific firms, with strong underwriting arguments, even greater reductions. However, it must be stressed that these are rating reductions, not premium reductions.
“The revenue growth of larger firms, measured at the last financial year end, was strong. This enabled most insurers to hold their level of premium income, while still reducing rates.
She added: “I believe that we have hit the bottom of the market now. For firms with higher levels of coverage, where we were completing the placements in the last week, we were already beginning to see insurers taking tougher stances on rates. The early signs are that next year will be more challenging.”
