WHAT SHOULD YOU EXPECT THIS YEAR FROM YOUR SECOND HIGHEST OVERHEAD?
It affects premiums because when there aren’t enough Insurers willing to participate, rates go up. There are three new “Insurers” (one very recent) who have entered the market in the last 12 months, all of whom will write conveyancing firms. This will help with premium rates but see below.
2 CONVEYANCING EXPOSURES
Most Insurers reinsure their books of business and don’t carry 100% of the claims themselves. Their reinsurers have required several major players to downsize their exposure to conveyancing because they see inbound fraud and economic related claims spiking in 2024. In 2023 one large solicitor insurer had to significantly reduce the number of conveyancing risks they insured.
This will impact you if you are covered by one of the Insurers affected. In some cases, it may mean your ability to renew will hang in the balance.
3 INSURER INTRANSIGENCE
It’s still a sellers’ market so “Insurers” in the main are paid to maximise profitability not premiums and turnover. That means that they won’t be fighting to win your business. They have focused over the past 3 years on reducing the number of their Insured firms, by increasing their rate on “high risk “work to grow their average premium per case in addition to reducing brokers’ commissions (note that large brokers with exclusive schemes take high levels of brokerage often in addition to fees).
4 HOW DOES THAT AFFECT MY APPROACH
Most brokers are now owned and run by large corporate players backed by private equity. They are looking for “vanilla” law firms who they can process (note the use of the word) as quickly as possible to achieve their targets. If you supply them with basic information, it will get put into a computer at the Insurer end and you will get what the computer says it is – i.e. you are not in control of your own destiny.
5 WHAT CAN I DO
Your insurance underwriters career security is not based on taking risks but making profit. If you want them to decide to Insure your firm where they were thinking of non-renewing, or to improve your terms, you must provide them with the evidence they need on file to protect themselves. That information is specific, and in the light of (2) above, you need to focus on addressing the risk attached to certain areas of work such as Building Safety Act (BSA) and conveyancing work. Particularly regarding BSA, this is an evolving issue and neither Insurers nor the majority brokers have got their act in order to fully communicate what information makes a difference, so we have done it for them, and we have a comprehensive outline of what you can do as a law firm, what data you can show them and what you can say to really make a difference.
Written by: Jon Cook