Law Firms Face Toughest PI Insurance Market in 20 years
What is the current state of the PI insurance market?
The uncertainty of a post-pandemic and post-Brexit world has had a huge impact on the professional indemnity insurance market. Whilst the state of the economy remains unstable, some insurance providers have decided to stop providing coverage to law firms or for certain work types. This has created an incredibly tough market for law firms looking to secure coverage, with decreased capacity and increased premiums. With the next renewal period just around the corner, it is expected that some firms will struggle to secure insurance coverage, with some even facing premature closure. At the current renewal over 150 firms are in this position.
For the legal industry, this is undeniably the toughest PI insurance market in the past 20 years.
What is expected to happen in the future?
Until the world settles into life post-pandemic and post-Brexit, it is expected that the PI insurance market will remain incredibly tough. It is impossible to say how long this will last for, or how many more firms will face closure during this time.
However, is it possible to speculate what will happen to the market once the world comes out the other side. Whilst it is unlikely things will ever return to how they were before 2019, it is likely that the market will eventually see an increase in capacity, with more insurers willing to provide coverage to law firms. This will hopefully cause the cost of insurance premiums to decrease, even if it’s only by a small amount. Once both of these changes happen, the PI insurance market will become much more manageable for law firm owners, whether they are looking to secure new insurance or renew their existing coverage.
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 extremely 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.
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 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 secured coverage
If you are one of the lucky law firm owners that has managed to secure coverage in time for the April renewal period, you can breathe a sigh of relief. You have probably been under a huge amount of stress trying to secure coverage for your firm, so take a moment to relax. However, if you don’t want to go through this 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. The Bamboo Platform is a law firm operating system, which handles the insurance and regulation required to run a law firm. By putting your firm on the platform, you can free yourself of the stress that comes with the renewing, and have peace of mind knowing that your firm will have insurance. Without the responsibility of maintaining compliance, you can focus all of your attention on delivering high-quality legal advice to your clients.
For firms that have not secured coverage
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, 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.
The Bamboo Platform is already in conversation with a number of law firms in this exact position. If they had put their firms on the platform earlier, they could have avoided this situation all together. Fortunately, law firms can join the platform at any point 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.