For third year in succession, the majority of solicitors' firms experienced a smooth professional indemnity insurance (PII) renewal process, the Law Society of England and Wales' 2016-17 PII survey has revealed.
Reflecting on the survey results, Law Society president Joe Egan said: "Brexit-borne uncertainty does not appear to have affected solicitors' PII and the average premium has actually dropped slightly.
"This continued market stability is good news for both clients and the profession, so it's well worth shopping around for a good deal; surprisingly few firms do at the moment."
The Law Society is keeping a close eye on a number of issues highlighted by this survey. Only a third of firms are aware of the closure in 2020 of the Solicitors' Indemnity Fund (SIF), which provided post six-year run-off cover.
Firms that are considering shutting down will need to factor in the additional costs of extending run-off cover beyond the prescribed minimum, so increasing awareness of the implications of the SIF's closure is an urgent priority."
Just over a quarter of firms reported being targeted by scammers in the last year, with spam emails and phishing attempts by far the most common approaches.
Joe Egan commented: "It is vital firms keep their risk management up to date - particularly in relation to scams - if they wish to continue to benefit from lower PII premiums.
"Some insurers now ask about the measures firms have taken to protect against scams, including their security and IT systems. The Law Society provides training and resources to help solicitors prevent scams and keep up to date on this important issue."
The survey found:
- The average premium was 1.3% lower this year, but mean premium costs rose for firms with one to four partners.
- As was the case last year, more than three-quarters of firms did not find the PII renewal process difficult.
- 58% of firms submitted only one proposal form, up slightly from 52% last year, while 24% submitted two or three forms. The number of firms submitting no proposal forms halved to 4%.
- Nearly three-quarters of firms renewed with their previous insurer, up from almost two-thirds last year.
- The strongest drivers for choice of insurer were cost and the insurer's financial stability. An existing relationship with an insurer was more likely to factor into the consideration of larger firms.
- 70% of practices chose traditional 12-month policies.
- It is a matter of ongoing concern that the median cost of run-off cover remains at a historically high 300%.
- A little over two-fifths of firms agreed it should be mandatory to purchase post six-year run-off cover after the closure of the SIF.
- Just over a quarter of firms reported being targeted by scammers in the last year, with spam emails and phishing attempts by far the most common approaches.
- 90% of firms were aware of the Law Society's practice note Protecting your firm if you fall victim to a scam, and almost half had reviewed it.