The big impression

The solicitors' professional indemnity insurance market is in turmoil. Quinn Insurance, a major insurer of solicitor firms in the UK, is under regulatory control with administrators appointed and pulled out of writing this business; other insurers have withdrawn from the market or are reducing their participation; and the cost of the assigned risks pool to insurers has soared. The result: PI cover will cost more this year than ever before. To get cover at a reasonable level, firms will need to prepare well for this year's renewal by starting early and being prepared for their business to be scrutinised by insurers. So, what can a firm do to make it as attractive as possible to PI insurers?

Well presented

First impressions are important. Take as much care with your renewal submission as you would a new client tender. Your submission should be well presented as insurers often refuse to quote if information is missing or poorly presented. A fully completed proposal form with well-referenced supporting information will greatly help your insurance broker present to potential insurers and assist them in negotiating good terms.

• Common mistakes include illegible handwriting, crossings-out, missing information and not signing and dating proposal forms.
• Any reports resulting from visits or investigations from the SLA, LSC, OSS or SRA must be included. Or, if a solicitor has restrictions on their practicing certificate, this information should be provided to evidence how these restrictions are met.
• The split of gross fees into the different work types should be as accurate as possible. Many firms don't classify their work correctly. For example, many classify their landlord and tenant activity as commercial property, but insurers rate these areas differently. Incorrect classification can result in higher premiums than necessary. Your broker can offer guidance on how insurers classify risk, and ideally provide a specific definition.
• If your practice has been operating for less than three years you will need to provide a copy of your business plan, as well as CVs for all solicitors.

Claims information is fundamental for underwriting assessment, and a good claims record remains an essential factor in keeping the cost of premiums down. If you have had a claim, the nature and history of it must be fully disclosed, along with an explanation as to why it happened and what preventative steps have been taken to stop a similar claim reoccurring. Insurers will also want to see claims summaries from previous insurers.

A deciding factor

A good claims record will need to be underpinned by demonstrable and robust risk management infrastructures, as this can be a deciding factor when underwriters set premiums or decide whether to quote. For example, insurers will want to know if a 'no blame' culture is operated, and whether fee earners are encouraged to come forward and report potential claims and circumstances early.

In addition, they will want to know how your firm assesses the quality of its work. Are regular peer reviews carried out and if so how is the work audited, and how is the supervision of staff addressed? Sole practitioners may struggle to answer these questions; however, a 'buddy' file review arrangement with another law firm may assist.

Achieving or working towards Lexcel or ISO 9000 accreditation is viewed favourably by insurers. They will also want to know if case management systems are in place, as these improve efficiency and help to prevent mistakes occurring.

Practices with multiple offices will have to demonstrate how these offices are managed and supervised to maintain consistent standards throughout the firm.

Risky business

Some firms with property departments will find it particularly challenging to get insurers to quote, and they are likely to bear the brunt of the price increases. Insurers will want to see evidence that the firm is fully aware of all the risks associated with practising in this area.

Property firms will need to explain how conveyancing work is approached to avoid common mistakes and errors normally associated with the failures in systems and procedures. A firm should be able to demonstrate what systems are in place to mitigate these risks. Insurers will want to know the value and type of conveyancing work undertaken and the split between sales and purchases.

Do not flood the market

Your choice of broker is important, and should be based on their access to the market and experience. The temptation to submit multiple applications can work against you, so don't flood the market. When insurers repeatedly receive the same presentation from numerous brokers, it can have a negative impact and affect their decision on whether they quote or not.

This year's PI renewal will be difficult. To get PI cover on the best terms possible, much time, care and attention should be spent compiling your PI proposal and appointing the right broker with the necessary specialist knowledge and market access.

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