According to Marsh, the October renewal season “saw another year of competition-driven reductions in professional indemnity (E&O) insurance rates for solicitors’ professional indemnity insurance for the top law firms in England and Wales.”
However, Marsh also indicated that “while the market continues to remain soft for larger firms,” coverage for smaller and medium sized firms has hardened.” Firms with less than five partners and sole practitioners involved in conveyancing, particularly those with conveyancing-related [property transfer] losses, have experienced premium increases in some instances of up to 100 percent this year.”
Andrew Jackson, a Managing Director in Marsh’s UK Professional Indemnity Practice, explained that the “downturn in the property market and rising mortgage fraud is fuelling these increases. Also, it is evident that a number of smaller practices still have not yet bound cover in the open market because they are either late in doing so or because they cannot obtain a quote due to the reduced capacity in the marketplace, therefore ending up in the Assigned Risks Pool. We are seeing more small firms in this situation this year than in prior years.”
The situation is the opposite for larger law firms, as they continue to enjoy “the benefits of the soft cycle, although there are signs that these conditions may change over the next 12 months,” said Marsh.
Sandra Neilson-Moore, European Practice Leader for Law Firms’ Professional Indemnity at Marsh noted: “The market for law firms at the larger end of the spectrum remained soft. We saw rating reductions of on average15 percent and for some specific firms, with strong underwriting arguments, even greater reductions. However, it must be stressed that these are rating reductions, not premium reductions.
“The revenue growth of larger firms, measured at the last financial year end, was strong. This enabled most insurers to hold their level of premium income, while still reducing rates.
“I believe that we have hit the bottom of the market now,” she added. For firms with higher levels of coverage, where we were completing the placements in the last week, we were already beginning to see insurers taking tougher stances on rates. The early signs are that next year will be more challenging.”
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