Insurers set out to offer long term sustainable Professional Indemnity cover for Solicitors
For insurers of the legal profession, 2021 has been about steadying the ship in order to sustain business protection. In recent years, an abundance of capacity meant that rates were suppressed and insurers couldn’t always apply pricing that was sustainable – however, since 2017, a sustained deterioration in the claims environment has seen rates increase to compensate for that. Those rate increases will likely stay in place for the remainder of the year as uncertainty persists around claims. While some of these claims have arisen from the pandemic, others have resulted from changes in the property market, growing cyber threats and additional pressures that solicitors are facing right now. This year, insurers have aimed to retain their renewals, applying targeted rate increase where needed and at sustainable levels.
Looking ahead after a rollercoaster of a year and the economic uncertainty it has triggered, it’s difficult to predict trends with great confidence. Still, we can expect the emergence of new products to help address existing gaps in the legal insurance market.
For example, ever since freelance solicitor status was created by Solicitors Regulation Authority in November 2019, there have been a lack of available options in the market for freelancer cover. This has meant that many individuals have not been able to take the freelance route even though they have been keen to do so. Few insurers have been willing to offer a product amid lingering doubts about the cover required and what level of take-up there would be. But enquiries from brokers have sparked the development of new options.
“We know freelancers need adequate and appropriate cover, and they want an affordable product,” said Donna Hurst, Senior Development Underwriter at Travelers Europe. “After much consultation with brokers, we’ve been able to apply our legal sector knowledge and experience to design a product that we believe meets those requirements. The product is in the development phase and we’re looking forward to launching it in the near future.”
The forthcoming closure of the Solicitors Indemnity Fund has created another gap. Under current arrangements, law firms that close without a successor practice are provided with six years of run-off cover under the SRA’s Minimum Terms and Conditions. After the six-year period, the Solicitors Indemnity Fund has traditionally provided cover. Although the closure date has been postponed by a further year, from the end of September 2022 insurance protection will no longer be in place for closed firms beyond the mandated six-year run-off period leaving individuals and law firms exposed. Some individuals will therefore be looking to obtain protection by securing extended run-off cover for greater certainty, but finding an inexpensive solution is a difficult task in a hardened insurance market.
“We’re developing a product to make sure protection is available to solicitors when they need it,” Hurst said. “It will provide run-off cover beyond the mandatory six-year period and will give individuals that additional peace of mind whilst remaining affordable.”
For future renewal seasons, look for insurers to be approachable for selective new business enquiries and a willingness to accommodate the right risks.
“We’re very much open for business and open to having conversations around specific risks,” Hurst said. “We are a longstanding partner to the legal profession and are keen to work closely with brokers to share experiences and ensure best risk management practices. To encourage that, we continue to have a wide appetite and flexible underwriting approach to enable us to meet the specific requirements of individual firms.”
Find out more about Legal insurance from Travelers HERE
Authored by Travelers
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The Travelers Companies, Inc. (“TRV”) is a leading provider of property liability insurance for motor, home and business. The Group has more than 30,000 employees and operations in the United States, Canada, UK and Ireland.
The group has total assets of approximately $110 billion, shareholders’ equity of $26 billion and total revenue of $32 billion, as of December 31, 2019. Our European based operations offer our customers a wide range of coverage through Travelers Insurance Company Limited, Travelers Syndicate Management Limited (Syndicate 5000 at Lloyd’s), Travelers Underwriting Agency Limited and Travelers Insurance Designated Activity Company.