Solicitors' PII Renewal on 1 October 2020: An Overview
posted 21st October 2020
If we were asked to sum up the 1 October renewal for solicitors' PII in one word, it would be......"brutal". It was undoubtedly the most difficult renewal we have experienced since solicitors moved their insurance arrangements to the open market in 2000.
The factors that combined together to create the perfect storm were:
Ongoing pressure on insurers to increase rates as an outcome of the Lloyds Review that was published in July 2018 and identified PII as a poor performing class of business
Significant losses arising from solicitors' involvement in failed buyer funded developments and other investment schemes
Sensitivity to the potential for additional losses from claims arising as a result of the Covid-19 lockdowns and the downturn in the economy, including a possible fall in the property market
Concern at the potential for significant "law firm failure" with firms unable to pay the premium for the 6 years run-off cover insurers must provide.
Below we set out a summary of the relevant issues and some high level analysis that will be of interest to firms that renewed on 1 October and also those who have their renewal in the coming months. It is important that firms know what to expect and are prepared.
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