SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX. August 2016

Transcription

1 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX August 2016

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3 Introduction Premium Rates by Region Regional Analysis by Work-Type Exposure Regional Analysis by Size of Firms Regional Analysis by Premium Rates, Average Number and value of Claims The Insurance Act 2015 Early Renewal Offers

4 2 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX August INTRODUCTION ENGLAND AND WALES SOLICITORS PI LANDSCAPE The analysis in this index is based on all proposals received by JLT since 2012, where we have full details. Yorkshire and North Welcome to the second edition of JLT Specialty s Solicitors Professional Indemnity Insurance (PII) Index. We have received a great deal of positive feedback following the release of our first edition, strengthening our beliefs around the importance of capturing data to provide insights into this specialist insurance segment. 10.3% 89% 27% 27% 47% We hope this edition and future editions will continue to spike your interest and help you to improve your knowledge of PII to make more informed buying decisions. This edition focuses on the regional dynamics of the Solicitors PII market in England and Wales. Here we start to analyse a number of components including premium rates, claims distribution, work type exposures and fee levels across 9 geographic regions. North 27% 14.2% 49% 118% 24% 3.4% 18% 50% 32% 93% Wales of England 16% 4.9% 43% 104% 42% 3.4% 3.3% 80% 27% 32% 41% Regional share of Law Firms Premium rates compared against UK National average Type of work undertaken Greater London High RISK CATERGORIES DEFINED Commercial Conveyancing - Commercial Conveyancing - Residential Litigation Personal Injury 31% 8.3% 46% 90% 24% 33.2% 94% 38% 45% 17% Medium Employment Landlord Tenant Matrimonial Wills Trust & Probate Low Criminal Law Immigration Other non-litigious Other Low Risk Work 16% 7.1% 29% 55% 128% 15.3% 105% 23% 27% 50%

5 4 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX August 2016 PREMIUM RATES BY REGION 180% Premium compared with England & Wales Average 160% 140% 120% 100% 80% 60% of England Greater London North Wales Yorkshire & North Region Year In our previous edition we illustrated how the England & Wales average premium rates had reduced between 2013 and 2015, however this comparison by region shows marked variations on the distribution of rates on an annual basis. The rationale is the impact of claims by individual firms, changes in work type exposure and fees.

6 5 REGIONAL ANALYSIS BY WORK-TYPE EXPOSURE 100% 80% Percentage of firms 60% 40% 20% 0% of England Greater London North Wales Yorkshire & North Region Work type by risk Low Medium High It is perhaps a little surprising to see regional variations in work type exposures by number of firms. This is something we will be investigating in more detail in future editions. In the chart above, we can see that the has the highest concentration of firms whose predominant work types fall into high risk areas, and correspondingly the lowest concentration of firms whose predominant work types fall into low and medium risk areas. In contrast, the of England has the lowest concentration of firms in the high risk work type area and correspondingly has the highest concentration in the low and medium risk areas. If we now compare these results to the infographic we can see a direct correlation with the having the highest premium rate compared to the England & Wales average and of England having the lowest.

7 6 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX August 2016 REGIONAL ANALYSIS BY SIZE OF FIRMS 150% % % 96 Fee volume 75% % 25% 0% of England Greater London North Wales Yorkshire & North Region Fee 0-100k k k k 1000k+ Average fee (RHS) As shown in the infographic on page 2/3, Greater London is the region with the highest number of firms. Here we can see Greater London also has the largest proportion of smaller firms with average fees below the national average, whereas the region which has fewer firms has a much higher average fee level compared to the national average.

8 7 REGIONAL ANALYSIS BY PREMIUM RATES, AVERAGE NUMBER AND VALUE OF CLAIMS 200% 175% 150% % of National Average 125% 100% 75% 50% 25% 0% of England Greater London North Wales Yorkshire & North Region Title here Current premium rates Average 6 years number of claims Average 6 years value of claims From the above chart can be shown that average claims values are driving premium rates and not average claim numbers. A direct comparison between Wales and the shows both regions to have a similar distribution in terms of premium rate and value of claims, however the number of claims is markedly different. A region with a smaller number of firms will potentially exhibit greater volatility to changes in the data, which possibly explains the differences between and Greater London. We are now approaching what is still the busiest renewal period for Solicitors Professional Indemnity Insurance. Despite the deteriorating claims position we highlighted in our first edition, we do not expect to see any significant drive for increased premiums by insurers, however there are a couple of new elements worthy of comment as you contemplate your renewal objectives.

9 8 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX August 2016 THE INSURANCE ACT 2015 The Act comes into force on 12th August 2016 and primarily concerns your duty of disclosure to insurers. The SRA in full has stated that the changes will increase the standard of disclosure in relation to regulated firms and it is expected that the changes will encourage both the insurer and the insured to ask more questions of each other. The annual proposal form is part of this process, however under the Act your duty is ongoing and you are required to make a fair presentation to underwriters. Careful consideration should be given to the completion of short form proposals where the inference that no material changes have occurred to your risk. EARLY RENEWAL OFFERS We are already seeing a variety of offers from the market with different features and acceptance criteria. We believe there are a number of elements you should give careful consideration to before accepting any such offer: Offer Certainty: how certain is your offer? Contract Certainty: do you have the offer of a binding contract that can be executed with clear documented terms? Insurer Security: do you have clear sight of your insurer(s) and their security rating? Acceptance Criteria: are you in a position to meet the criteria and do you fully understand the terms and conditions? Value for Money: does the offer represent value for money for your firm in the current market conditions?

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11 CONTACTS JAMES FROST & of England +44 (0) TOBY KING London & +44 (0) JOEL HARDING London & +44 (0) TONY BROWN North +44 (0) MATTHEW BAKER & Wales +44 (0) NAM QURESHI & of England +44 (0) JLT Specialty Limited The St Botolph Building 138 Houndsditch London EC3A 7AW Tel +44 (0) Fax +44 (0) Lloyd s Broker. Authorised and regulated by the Financial Conduct Authority. A member of the Jardine Lloyd Thompson Group. Registered Office: The St Botolph Building, 138 Houndsditch, London EC3A 7AW. Registered in England No VAT No August