Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Insurance UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (August 25, 2020, 1:24 PM BST) -- Solicitors should renew their professional insurance cover now as the deadline approaches, with the sector facing a more difficult market and increased premium prices during the COVID-19 pandemic, the Law Society has warned.
Most legal practitioners renew their professional indemnity insurance, which offers them protection if a client claims their services were not up to scratch, on the Oct 1. deadline. But this has "always created a bottleneck, with underwriters and brokers rushing to process proposals to meet the deadline," the industry body said on Monday.
Factors such as the coronavirus outbreak mean that this October could be "the most challenging" time for lawyers since the insurance market opened up 20 years ago, according to Simon Davis, president of the Law Society. The insurance market was already "hardening" in 2019, which is another consideration, Davis said.
He warned that insurers typically take a cautious approach and are reluctant to take on new risks or seek new clients. That means law firms could have to provide more details up front. Insurers will also have questions about how the lockdown has affected a law firm's business, including any redundancy plans.
"First and foremost, firms should already be talking with brokers about finding cover. If you have not done so, it should be made a priority now," Davis said.
The body, which represents solicitors in England and Wales, warned that it expects a rise in premiums for almost all firms in October, and urged businesses to review their budgets.
Larger law firms faced big increases at the April renewal deadline, the society warned. A study by Lockton International, an insurance broker, found that insurance premiums rose by 15% on average and by approximately 40% for those with turnovers of £50 million ($65 million) to £100 million.
"Firms should brace themselves for an average increase of 30%, but those with bad claims histories should expect far higher increases," Davis said. Those that find themselves particularly badly affected by the government lockdown should speak to their broker about how best to make proposals to prospective underwriters, he said.
COVID-19 has hit the financial sector hard, and regulators have been looking at how they can work through the crisis.
The European Insurance and Occupational Pensions Authority recently said that the capital buffers held by insurers could be badly hit by the downturn in the investment market caused by the virus. The regulator has also said that businesses should offer remedial action to clients for products that have been affected by COVID-19.
"It is vitally important that insurance companies place the fair treatment of customers at the heart of their response to the COVID-19 pandemic," EIOPA said in July.
--Additional reporting by Martin Croucher. Editing by Ed Harris.
For a reprint of this article, please contact reprints@law360.com.
