What we experienced in the marketplace during the 2014 PII renewal season
This blog post was also featured as a column in the November 2014 issue of Legal Practice Management magazine. To read the issue in full, download LPM magazine (11MB file).
The 2014 PII renewal season was somewhat shrouded in mystery compared to previous years. Due to the removal of the common renewal date, it is unclear how many practices continue to renew their insurance on 1 October, but it is certain that many firms may be on 18-month policies. Without the data from the now-defunct assigned risk pool (ARP) it is also difficult to ascertain what the overall premium pot looks like for this year, or indeed how many firms were unable to secure cover. However, we can consider what we experienced in the marketplace during the renewal season, and make several assumptions.
First, there was an influx of new capacity, while existing capacity continued to show a desire to cover this historically challenging profession. Therefore there was greater choice for practices, and rates certainly were put under pressure. This is not to say that premiums reduced as fee income for many firms is on the rise, but aggressive pricing was witnessed on numerous occasions.
We can only speculate as to why there is this increase in underwriting appetite (it could be economic recovery and the housing market), but it can only be positive news for the legal sector.
Second, there was a notable increase in the demand for A-rated insurance, no doubt driven by some high-profile withdrawals of insurers from the market but also pressure from the lenders who have a minimum security rating requirement of ‘A’ – while the property market continues to be buoyant, no firm wants to be removed from a lender panel.