Professional indemnity insurance: how to get the best deal

Early renewal offers to secure customers

Several insurers have offered early or a quick renewal to secure customers.

The key change from last year is the increase in the number of early offers and that they’re being offered to a broader range of firms.

Extended policy periods of up to 18 months have also been more commonly offered by insurers, useful for firms seeking greater certainty.

In 2023, extended policies were mainly limited to renewals, but insurers are now offering extended terms for new policyholders.

Most insurers involved seem to want to grow their portfolios with new business, while also retaining their current customer base. This is resulting in better costs for many practices.

There remains caution amongst insurers, and there are risks that insurers are mindful of, such as:

• buyer-funded and off-plan developments with high, non-refundable deposits
• financial mis-selling in significant volume
• poor financial health
• systemic claims issues

A positive impact on rates

A welcome reduction in rates is expected for well-run practices by October, due to competition from longer-standing insurers, along with desired growth from last year’s new insurers.

While the extent of these reductions is not yet clear, there have been suggestions it could be up to 20%.

This decrease in rates doesn’t necessarily mean there will be a significant reduction in premiums though.

Rising inflation has led to increases in fee income, which will impact premiums.

However, for practices which are well-run and successful, the cost of premiums shouldn’t erode profit margins further, as it may have done at recent renewal periods.

This softening of rates might not affect every law firm. Practices that have an adverse claims position or are heavily involved in higher-risk areas with less revenue might not benefit.

Firms shouldn’t expect premiums to fall without effort on their part.

How to get the best out of your renewal

The renewal season is a great opportunity for practices and should be used wisely. To make the most of it, we recommend you:

• start the process early
• prepare a quality presentation
• present your practice positively

For smaller practices (four or less partners), find out which insurers can be accessed on your behalf and how open they are to transferred risks.

There is no benefit in accessing the same insurer through different representatives or presenting risks to insurers that fall outside of their appetite framework.

To streamline the process you can:

• remove unnecessary links in the chain
• find out whether your current broker can market on your behalf

If this isn’t the case, act quickly to either complement or replace their services with a reputable alternative.