Solicitor insurers are predicting big PI premium reductions on 1 October but how come most law firms don’t change?

Quality PI: Solicitor insurers are predicting big PI premium reductions on 1 October but how come most law firms don’t change?

It is acknowledged by Insurers that new competitive forces will drive rates down for solicitors PII for 1 October renewals, but statistics show that the majority of law firms don’t change.

Why is this? 

Well, there are a number of reasons.

The vast majority of solicitor brokers are now owned by private equity backed groups and large corporates. These entities are often driven by stretching divisional and individual targets where account executives know that if their clients’ premiums drop significantly, they will also lose income where they take a percentage of the premium as their commission.

With a “first come first served” approach pursued by Insurers, the system does not reward healthy competition.

It means that if the incumbent broker wants to defend their client account, (there is a temptation to retain clients with their favoured Insurer so that they continue to bank their overrider commission deal income) and maintain the status quo, they simply get in early, circulate their clients proposal form and control both the quote process and also the price – resulting in any other broker being shut out.

Some Insurers complain that their knowingly competitive quote provided the previous year was not taken up, the inference being that it was not presented to the brokers client.

Crucially, many brokers also adopt a commoditised approach to renewals, wanting to get volume through their systems to max out on their earnings. This means that they miss important details that might be influential in reducing the cost of the premium.

Insurers underwriters have careers which rely on their track record, so when we ask them to discount a premium for a client, we can only expect them to do so with documented evidence of the quality features that justify those discounts – that is what many brokers don’t do.

The potential for laziness and lack of effort has never been more relevant than now, as better rates are on offer, against a backdrop of broker consolidation.

The issue is: if you haven’t tested the market, how will you know whether you have got the best result?

There is no market standard which generates a best outcome.

To achieve this, collaboration with market specialists can be invaluable. By leveraging the expertise of such specialists, law firms can access advice which helps them to achieve maximum premium savings in the upcoming renewal cycle.

Kindly shared by Quality PI