Competition driving reductions
The 1 October renewal season saw competition-driven reductions in professional indemnity insurance rates for solicitors’ professional indemnity insurance for most law firms in England and Wales, says Marsh.
Sandra Neilson-Moore, European practice leader for law firms’ professional indemnity at Marsh said: "The market continued to be soft with the rates on coverage for primary layers decreasing by 10% and more for firms in the top 100. Gross revenues for most of the larger firms continue to increase, which again enabled insurers to hold premiums relatively steady, while granting healthy reductions in terms of rate on revenue. Where competition was present, or if a firm was overpriced to begin with, real premium reductions were also possible.
"For smaller firms, the competition was even keener. The level of premium represented by the mandatory primary layer is in our view likely, therefore, to fall below £200m this year. However, despite the continuing intense market activity, our experience this year was that only a minority of firms changed insurer. Incumbent insurers in most cases ‘did enough’ to keep the clients they wanted to keep."
Andrew Jackson, a managing director in Marsh’s UK professional indemnity practice, said: "The majority of smaller firms continue to leave their renewals until the last two weeks of the renewal deadline. The singular renewal date is unique to the solicitors’ professional indemnity insurance market and, as a result, firms can achieve reduced premiums as the market strives to preserve their share in the closing days of the process.
“These competitive pressures have resulted in significantly lower premiums which, on the face of it, is good news for firms but in the longer term may not be sustainable.”
