Some solicitors are still punch drunk from last year.

With fewer insurance companies offering cover this year solicitors need more help than ever. Some are rolling with the punches, others have already given up. Here are the options including the good bad and ugly.

Last year the renewal season lead to the dreaded ARP charging solicitors 35% of turnover just to stay in business. Since then, Quinn has proved unreliable and their biggest supporters in the broking community are scrambling round the market for a viable alternative. The Law Society Gazette reports that mergers are on the up and “the biggest driver over the next few months will be the professional indemnity insurance renewal, which will be a killer of many small firms”.

Why are there fewer realistic options?

Some brokers refused to allow Quinn to buy books of business at unsustainable rates. Yet they are no longer offering terms. Meanwhile, two other solicitors indemnity insurers have exited the market, albeit quietly.

The remaining underwriters will be offering the best terms to those they consider the lowest risk. Does your broker know how they work that out? If so, they should have told you last year what further measures would be prudent. Some solicitors will fail to secure terms based on their management of the real risks.

What of the ARP?

The ARP is not being disbanded yet there will be no room for startups any more. Anyone that does find themselves in the ARP will have 12 months to get out rather than the current 24. They will have to pay the inflated rates and meet the SRA training requirements at their own expense. If they are not out of the ARP in 12 months there are three options.

First is getting accepted by an appropriate insurance company because of the reduction in risk. The second is a choice between selling up and closure, whilst paying the premium for run-off cover.

How can solicitors help themselves?

A plan that identifies the risks that underwriters want to see reduced has proved beneficial to the new practices that launched this year. There is no room for new practices in the ARP so they have to have robust plans. There are specialists who have years of experience who can identify weaknesses quickly and plan to reduce the risk. We recommend a chat with experts like Roger Flaxman.

Last year I mentioned the good, bad and ugly. Here’s an updated version.

The Good

An insurance underwriter is unlikely to offer terms to a practice if they see the same proposal form from two different practices. If you are 100% satisfied with your broker ask them to approach your current insurance company as soon as possible.

The Bad

Not everyone has relationships with underwriters that understand the risks. If you’re not certain your supplier fought hard enough for you find someone that will. There are insurance companies that are ready to help those that are managing their risks.

The Ugly

Some solicitors will fail to arrange cover; the ARP is a temporary safety net that hurts. Clearly, the stability of the insurance company is paramount and if another falls over after the renewal season the consequences are dire. If no qualifying cover is found the practice is immediately liable to pay claims. Four weeks without cover and the ARP accepts claims yet will seek to recover any costs from the principals of the practice.

Top Tip

With fewer options the ARP is a worrying possibility. Securing terms from a stable underwriter is paramount. Yet asking more than two brokers to help may prove costly. Those with plans to manage risks will be cherry picked by underwriters who offer the best terms. Make sure you can prove your risks are being reduced. If you’re not sure how, contact Roger.