The cost of professional indemnity insurance cover for the top 20 UK law firms dropped by up to 10 per cent this year, according to research for The Lawyer.
Both Norton Rose and Denton Wilde Sapte enjoyed 10 per cent drops on their premiums for the primary layer of cover, when renewed at the beginning of this month, and indications from most firms in the top 20 point to a general softening of the market.
CMS Cameron McKenna enjoyed an 8.5 per cent drop, while Addleshaw Goddard, Allen & Overy and Eversheds all witness a 5 per cent drop.
“Across the board, we’re pretty confident that the primary pot is going to have gone down,” said Elizabeth Mullins, executive director at Aon Professional Risks.
Sandra Neilson, senior vice president in the financial and professional services practice at Marsh, agreed, saying that brokers are mainly responsible for forcing premiums down. “We do get a lot of pressure from our clients to get the best price,” said Neilson. She added that competition in the market has made this easier for the brokers.
But the three main providers, The St Paul, Zurich and QBE, are not sitting on their laurels. Instead they are launching new insurance products and finding ways of encouraging firms to reduce risk in order to maintain their position.
Jonathan Davies, underwriting manager at The St Paul, said: “Many firms have reaped the benefits of working with their insurers over several years to develop effective risk management.”
Feedback from the top 20 bears out Davies’ view. None has changed its broker this year, and only one says it has changed insurer.
The market is gauging the effect of the one-month extension of the renewal deadline. The idea was to remove the frenzy of renewal from the summer holidays as well as giving firms longer to make their decisions.
In practice, the brokers say that many firms left renewal until September and few took advantage of the benefits. Some of the larger firms elected to renew early, with Clifford Chance extending its policy to the end of May. However, most firms simply chose to renew on the deadline of 1 October.
Eversheds sticks with Aon
Eversheds enjoyed a 5 per cent reduction in the primary layer of premium between this year and last.
Partner Robert Chapman is in charge of the firm’s professional indemnity insurance cover and its broker is Aon.
In June this year, the firm conducted its regular three-year review and beauty-paraded a number of brokers. Ultimately, the agreement with Aon was renewed for another three years.
Chapman says the change in renewal date ‘made no difference at all’, as the firm begins looking at renewal early on, and – like the rest of the top 20 – renewed on time.
Chapman says that earlier in the year, the talk was all about how the market was hardening. Like other firms, Eversheds has been examining ways to reduce risk and help bring down the premium it has to pay.
“Everybody and his dog is looking at risk management,” Chapman says.