What is the current state of the PI Insurance market?
The PII market for law firms has been a real rollercoaster over the past 20 years or so. There have been times of stability and certainty and unfortunately, more times of volatility.
The Insurance market generally is affected by a great number of factors, not least a post-pandemic and post-Brexit world. Whilst the state of the economy remains unstable, with high inflation and interest rates, some insurance providers have decided to stop providing coverage to law firms or restrict cover away from certain work types. This has recently created an incredibly tough market for law firms looking to secure coverage, with decreased capacity and increased premiums.
There is new capacity in the market, but this comes with a caveat and isn’t the only answer. New capacity takes time to bed in properly and knee-jerk reactions will simply cause more volatility that all parties want to avoid.
There is cause for some positivity, but as we all know, there’s always a “new problem” for Insurers to consider, especially in property. This could come in the guise of the Building Standards Act 2022 (BSA) in 2024.
What is expected to happen in the future?
It is expected that the PI insurance market will remain tough. It is impossible to say how long this will last for, or how many more firms will face closure during this time, yet we may be looking at some level of stability in 2024.
However, far from giving reason to relax, firms should be using the breathing space to really take stock of their positions and consider the future planning of the firm very carefully.
What is the impact on the legal industry?
Whilst the PI insurance market has had an impact on the entire legal industry, some legal areas have been hit much harder than others.
One of the worst impacted areas has been property. Insurance providers have been extremely cautious about offering coverage to firms that provide property-related services, as they see them as particularly high risk in current market conditions. This has meant that law firms that specialise in property have had to be very proactive in identifying risks and implementing changes, whilst outlining everything in their proposal documentation.
However, even this hasn’t been enough for some property law firms. Now, there’s the BSA to consider and law firms should continue to be vigilant.
Alongside property law, there is evidence to suggest that new law brands and small legal practices have found it difficult to secure coverage. With insurers hesitant to take on the risk of less established firms, we could see a significant impact on the industry as a whole.
What options do law firms have?
With the next renewal period fast approaching, law firms across the country will have had a busy and possibly stressful few months preparing their documentation and searching for coverage. Depending on whether you have managed to secure insurance or not, you will have a couple of options available to protect your firm from closure, both now and in the future.
For firms that have secure cover:
If you don’t want to go through the anxiety every time you approach a renewal period, you might want to think about what you can do to make the process easier the next time around. Bamboo provides a law firm ecosystem that handles the insurance and regulation required to run a law firm.
By putting your firm on the Bamboo platform, you can free yourself of the stress that comes with the handling insurance matters, and have peace of mind knowing that your firm will have cover. Without the responsibility of maintaining insurance, you can focus all your attention on delivering high-quality legal advice to your clients.
For firms that have not secured cover:
However, if you are one of the unlucky firm owners that is yet to receive an insurance policy, there is no need to panic. There are a number of options available if you are in this position, even if they aren’t your first choice, including selling your firm and paying run-off cover. However, if you are not yet ready to say goodbye to your brand, clients or staff there is a way to keep your law firm up and running.
Bamboo is often in discussions with a number of law firms in this exact position and has acted to assist where possible. If those firms had put their practices on the platform earlier, they might have avoided this situation altogether. Fortunately, law firms can join the platform at any time and receive support with securing insurance coverage. Once on the platform, you can finally turn your attention back to what is really important: your clients and brand.
Whether you have managed to secure professional indemnity insurance for the upcoming renewal period or not, the Bamboo Platform is here to help. Get in touch to discuss how Bamboo can support your brand, clients and staff.