Turbulent Times Call for Stable Insurers
The market for sustainable professional indemnity cover looks different
If you have ever been a reluctant passenger on a rollercoaster, stepping back onto solid ground can be a welcome relief. That holds true for businesses too – especially now.
The economic challenges of the past few years have created a turbulent environment for businesses. In the professional indemnity (PI) insurance space, many carriers have dropped their cover, made significant changes to their pricing, or left the market altogether. For a business looking for suitable PI insurance protection, the environment has been jarring. But fortunately, it’s also been clarifying.
Amid the turbulence, important information has emerged about the insurers who remain in the market. Businesses have a clearer sense of which carriers are operating sustainably. They can see which insurers have a strong foundation of financial security that makes it possible for them to pay claims today and more likely that they will be around in the future.
The power of a long history
In the current marketplace, an established insurance company can lean on its history to inform its underwriting and risk selection. It is able to tap into a wealth of claims data that can help forecast future market trends. It can mine the expertise of an experienced team.
“Our risk managers work closely with both our claim and underwriting teams to track claim trends and ensure that underwriters are informed,” said Donna Hurst, Director of Professional Indemnity at Travelers Europe. “Our claims team is made up of qualified solicitors who understand our clients’ businesses and use their expertise to work for the best outcomes for our clients. All of this allows us to develop seminars, webinars, factsheets and bespoke training sessions that help our clients make the best decisions for their business.”
During her time in the market, Hurst has seen first-hand the difference that it makes to clients and brokers alike to have ready access to expert and experienced solicitors’ PI professionals. Travelers Europe has 15 underwriters on the solicitors’ team, she said, and some of them have been writing Solicitors’ PI for over 20 years.
“We regularly meet with our key brokers to understand their needs and monitor the constantly changing marketplace,” she said. “Our clients look to us for support when facing the uncertainty that an allegation of negligence can bring to the practice. We are their partners and provide advice and support to help them manage their business safely.”
An appetite for a wide range of risks
Travelers Europe is able to consider insurance for all SRA-regulated firms, from sole practitioners to multi-office global law firms. Our PI insurance, which meets the requirements of the SRA’s Minimum Terms and Conditions, also includes cover for liability arising from accidental damage to documents and provides compensation for court attendance.
“Whilst we continue to monitor our exposure to conveyancing across the book, we have now raised our cap (it was previously 25%),” Hurst said. “We can consider sole practitioner firms with up to 40% conveyancing and all firms with an income up to £4 million who can demonstrate excellent risk management procedures and claims experience, and who have been held by the same broker for at least three years.”
Adapting to a changing sector
During the pandemic alone, the legal sector experienced more change than it had seen in many decades. It has continued to evolve amid the economic challenges that have followed. The key to being a sustainable, dependable presence in the solicitor’s PI marketplace, Hurst said, is embracing these changes.
“At the moment, emerging case law, regulatory changes and fluctuations in the economy are among the key factors affecting the risks and opportunities law firms face,” Hurst said. “By monitoring changes on the horizon and trends we are seeing on the claims side, we are able to remain relevant to the legal industry and ensure we are providing a product and service that meets the specific needs of every firm we insure.”
Monitoring and responding to market changes has led Travelers Europe to launch new offerings in recent years. One is a post-claim wellbeing service, which offers professional support from a third-party provider to any policyholder involved in a claim. Many professionals in the legal sector struggle with poor mental wellbeing, which has led to an increase in claims related to retainer management issues and errors due to slips and lapses. The wellbeing service is designed to help a person get back on track if they experience such an event.
Last year, Travelers also launched a product specifically for freelance solicitors. Since 2019, the SRA has allowed individual solicitors to offer reserved legal activities without setting up a regulated practice. The new product provides more flexibility around working practices and aims to accommodate the diversity of the sector, with premiums starting from £950 and no appetite restrictions to activities undertaken.
Going forward, Hurst and her team plan to continue to monitor claims trends and analyse claims arising from work undertaken during the pandemic. Specifically, they want to better understand how remote working and the pressures of the Stamp Duty Land Tax window impacted firms’ ability to undertake work safely.
They are also looking for new ways to inform clients about their evolving risks and ease the process of buying insurance. For example, the team is working on a risk management portal for insured firms that contains articles to help clients manage the risks their firms face on a daily basis. To make the renewals process easier for small firms, they’re working on ways to reduce the time they have to spend completing forms.
They have also introduced longer-term options for cover, including an 18-month policy that Hurst hopes will allow firms to spend less time thinking about insurance at a time when they don’t need additional distractions.
“Firms that meet the criteria for cover won’t face the headache of an insurance renewal every 12 months,” she said. “They can concentrate on running their businesses.”
Travelers has been one of the leading insurers of solicitors in England and Wales since 2000. Visit Travelers to learn more about its PI insurance offering.
The information provided in this document is for general information purposes only. It does not constitute legal or professional advice nor a recommendation to any individual or business of any product or service.
