SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX

Transcription

1 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX MARCH 2016

2 JLT Specialty has over 1,100 clients in the legal sector, ranging from sole practitioners through to global law firms. We pride ourselves on our competitiveness, the ease of our application process and the speed and quality of our service. Our client proposition is built upon our deep specialist knowledge, client advocacy, tailored advice and service excellence. Together, we place our clients first, champion independent thinking and expect to be judged on the results we deliver.

3 SOLICITORS PROFESSIONAL INDEMNITY INSURANCE INDEX INTRODUCTION Welcome to this first edition of JLT Specialty s Solicitors Professional Indemnity Insurance (PII) Index. For a number of years we have recognised the importance of capturing data to provide fact based insights into this dynamic and highly specialist segment of the insurance market. The aim of the index is to give firms clear guidance and up to date market intelligence when considering PII. We hope that this data driven approach will provide firms with a greater level of knowledge, on which to base their risk and insurance decisions. This edition is the first in what will be a continuing series. In this index we analyse the key components of premium rates, claims and work-type exposures, and importantly how the current position compares to earlier years. Future editions will analyse some of these specific areas in more detail. All the following graphs represent movement from the base year identified. A movement from to represents a 40% increase and a movement from to 0.6 represents a 40% decrease. PREMIUM RATES CONTINUE TO REDUCE Premium Movement (1=2012) Despite rising fees, premium rates (defined as premiums divided by fees) reduced again in Premium rate Practice fees RATE REDUCTIONS FOR FIRMS WITH CLAIMS Rate Movement (1=2012) Firms with claims payments or reserves in the past 6 years have seen greater reductions than firms with a clean claims record Firms with claims Firms without claims

4 RATE REDUCTIONS FOR HIGH RISK FIRMS Rate Movement (1=2012 Low Risk ) Firms whose predominant work types fall into high risk areas (see definition in Appendix) have benefited from greater rate reductions High Medium Low Whilst the evidence points to a general down turn in rates, our analysis supports greater rewards for firms with higher risk exposures and/or historic claims. These firms were potentially the hardest hit in terms of rate increases in the years immediately post the property market crash (2008). Given such firms usually pay higher premiums, the increased competition due to the new entrants to the market place in 2015 has also had an impact. We are possibly seeing the advent of a 2 tier market with a growing proportion of the low risk no claims firms renewing at level or marginally increased terms, with the higher risk firms with claims seeing greater volatility. CLAIMS VALUES INCREASING WHILST PREMIUM RATES DECREASE Claims Values Movement (1=2012) When comparing the moving value of the past 6 years claims we have seen a significant year on year increase. This has not yet been reflected in increased rates, which continue to fall since the increases seen during the turmoil created by the Balva / Berliner problems in Value of previous 6 years claims Premium rates

5 2016 CLAIMS NUMBERS DECREASE WHILST EARLIER YEARS CONTINUE TO DETERIORATE Claims Values and Numbers Movement over time (1=2010) The increase in 6 year claims values shown earlier is largely due to a deterioration of the claims position in earlier years. The number of claims per year is now decreasing but the value of individual claims is increasing. The relatively small number of client account fraud claims has had a marked impact on the value of claims in Value of claims at 2014 renewal Value of 2015 claims ex fraud Value of claims at 2015 renewal Number of claims per year SOME MARKED CHANGES IN FEES FOR DIFFERENT WORK TYPES Average Worktype Percentage Movement Since Commercial Commercial Conveyancing Residential Conveyancing Criminal Law Employment Immigration Landlord Tenant Matrimonial Litigation Personal Injury Other Non-Litigious Wills, Trust & Probate Other Low Risk Work Post the recent changes in the legal profession and the improving property market we have seen a shift in the types of work being performed by firms. Residential conveyancing work, which is the area viewed by underwriters as being the highest risk, has increased whilst at the same time we have seen a significant reduction in fees from personal injury work. Change in areas of work APPENDIX: RISK CATEGORIES DEFINED HIGH MEDIUM LOW Commercial Conveyancing - Commercial Conveyancing - Residential Litigation Personal Injury Employment Landlord Tenant Matrimonial Wills Trust & Probate Criminal Law Immigration Other non-litigious Other Low Risk Work Note: The analysis in this index is based on all proposals received by JLT since 2012, where we have full details.

6 YOUR REGIONAL CONTACTS JAMES FROST Midlands & East of England +44 (0) JOEL HARDING London & South East +44 (0) MATTHEW BAKER South West & Wales +44 (0) TOBY KING London & South East +44 (0) TONY BROWN North West +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 March