Gareth Milner, managing director at JMG Professional Risks, gives a synopsis of the 2023 PII renewal season.
Ahead of JMG’s complete analysis of the PII market being released, below are the pertinent points of this year’s autumn PII marketplace:
Rate stabilisation and reduction
Most practices will have seen rates (premiums as a portion of overall fee income) stabilise or perhaps even reduce compared to the last few years. This may not mean an actual reduction in monetary premium as most firms continued to see revenues increase over the last few years.
As many firms continue to see revenues increase this may not mean a reduction in monetary premium, but competition amongst insurers for law firms’ business was significantly higher too.
Increased competition and appetite
Nearly all insurers giving SRA Minimum Terms & Conditions primary layer cover broadened their appetite somewhat, either by increasing limits for work types such as conveyancing or providing quotations for firms with problematic claims histories who previously experienced very limited or no alternative options.
The excess layer market benefitted from both new entrants and increased appetite from insurers already writing cover, although conversely to primary layer insurers, excess layer providers did generally attempt to maintain rates (or at least premiums) from the last renewal for most clients.
New insurers and increased capacity
There were at least two new entrants into the primary layer space for legal practices, as well as more insurers writing excess layer cover with wide appetites that increased as the renewal season progressed.
Existing insurers of law firms also increased the amount of business they were willing to write, meaning many were actively looking to take on new clients rather than just quoting renewal business.
18-month policies made a return amongst a few insurers, with many clients opting to take an extended period due to the improving rates also on offer.
Insurers continue to keep a focus on behaviour driving claims, the financial rigour of clients and their Cyber risk controls. Wrongful funds transfer via phishing attacks arguably remains the most immediate threat law firms face. For medium and large practices, insurers also now seek to understand a firm’s culture by exploring their approach to ESG matters and staff wellbeing.
In summary, the above signs all point to the PII market entering a ‘softer’ cycle. Whilst the wider economic climate is largely beyond everybody’s control, should this trend continue then more capacity is likely to follow with further rate reductions and other new entrants, giving firms even more choice at their next renewal.