Categories:UK

PI insurers warn of 25 per cent rate hike

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  • More claims will mean rate increases

    This is a very big market place for insurers. There are 9,000 law firms in the UK, 90% of those have less than 5 partners. They are having no problems in getting insurance for the time being, but it is clear that that could change. Really it is all dependent on whether lawyers see a lot more claims coming through next year. And the way things are going it is likely that there will be a change in the rating situation which those 9,000 firms really need to be aware of.

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  • Changing 1st October renewal dates is the answer

    The legal profession is the only profession were everybody renews their insurance on the same date. The reason is that it allows The Law Society to make sure that everybody has cover. But it could work in the opposite direction. If you haven't got enough policyholders when it comes to 1st October you can change your underwriting criteria to lower prices. In the insurance world it is known as 'chasing volume'- that means chasing policyholders. They need to do this to meet the budget which has been set, after 1st October there is no time left to make up the number of policyholders before the year end.
    This is something which the Law Society needs to assess. The 1st October renewal date is not good for anyone. Solicitors leave it to the last minute and some people take advantage of that, which drives rates downwards on an elastic band which is about to snap.

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