Our research reveals that 46% of solicitors saw their professional indemnity insurance premiums increase over the past two years.
Of those who have seen them rise, 15% said they increased by over 30%. Only 16% said they had fallen.
Rising premiums could boost demand for premium finance amongst solicitors, which consists of a finance agreement with a third party that allows them to spread the payment of their cover. Our research reveals that 44% of solicitors have used it in the past. Of those who have not, 45% have considered it or would consider using it. However, some 16% did not know what premium finance is.
Premium finance as an attractive proposition
Sharon Bishop, CEO, said: “Insurers are asking for more detailed information from solicitors, and are far more focused on their financial stability. This, combined with the introduction of the extended indemnity period, means some insurers are cutting back on their professional indemnity books and declining to offer renewal terms. This can also lead to some solicitors seeing a rise in their premiums, which can make premium finance appear even more attractive.”
Of those solicitors who have seen their professional indemnity insurance premiums rise over the past two years, over half (54%) saw a double digit increase. More than one in six (15%) saw their premiums rise by over 30%.
A rise in professional indemnity insurance premiums
|Percentage increase in professional indemnity insurance premiums over the past two years||Percentage of solicitors who have seen professional indemnity cover increase during the past two years|
|Between 1% and 5%||15%|
|Between 6% and 10%||22%|
|Between 11% and 15%||19%|
|Between 16% and 20%||13%|
|Between 21% and 30%||7%|
|Between 31% and 50%||4%|
The findings help explain why 77% of solicitors interviewed have or would consider renewing their professional indemnity insurance policy early to benefit from ‘early bird’ discounts. The research revealed that 79% of current professional indemnity insurance policies expire within 12 months, 13% within 12-18 months and 7% over 18 months.