header-logo header-logo

PII higher for smaller firms

20 September 2023
Issue: 8041 / Categories: Legal News , Profession , Insurance / reinsurance
printer mail-detail
The average professional indemnity insurance (PII) premium is equivalent to 5% of a law firm’s annual turnover—but small firms pay more
Research commissioned by the Solicitors Regulation Authority (SRA) and Legal Services Board (LSB) found premiums typically ranged between 3% and 9% of annual turnover, with a 5% median.

However, the research identified that one in five of the 300 firms studied paid premiums worth 10% of turnover or even more. The vast majority (90%) of these firms paying 10% or more were small firms.

The researchers investigated the reasons for the difference. The key factor was practice area—the more property work a firm did, the higher their premium, with analysis suggesting such work attracts premiums of 8%–12% of turnover. In contrast, work on uncontested divorces was estimated to attract premiums of between 2%–7% of turnover.

Firms were also charged higher premiums where they had a history of regulatory findings, had a higher ratio of fee earners and qualified fee earners compared to turnover, or tended to hold more client money.

Other factors included the relative sophistication of the firm’s cyber and security arrangements, ability to absorb losses or recompense clients from other work, and the size of the overall premium paid as the higher the fee the more open the insurer to a bespoke arrangement.

The SRA and LSB said their discussions with insurers indicated premiums are unlikely to fall in the near term. The research, ‘Econometric analysis of PII costs for legal services providers’, was published last week.

Separately, the Law Society has revised its practice note on PII. Law Society president Lubna Shuja said the note was ‘new and improved’, and would benefit the ‘almost 40% of solicitors’ firms [who] still renew their PII on the old common renewal date of 1 October’. 

MOVERS & SHAKERS

NLJ Career Profile: Maria Karaiskos KC, Church Court Chambers

NLJ Career Profile: Maria Karaiskos KC, Church Court Chambers

Maria Karaiskos KC, recently appointed as the first female head of Church Court Chambers, discusses breaking down barriers, the lure of the courtroom, and the power of storytelling

Cripps—Simon Main

Cripps—Simon Main

Firm strengthens residential property team with partner hire

Hugh James—Danielle Cahill

Hugh James—Danielle Cahill

Private wealth disputes team welcomes partner in London

NEWS
In a very special tribute in this week's NLJ, David Burrows reflects on the retirement of Patrick Allen, co-founder of Hodge Jones & Allen, whose career epitomised the heyday of legal aid
Writing in NLJ this week, Kelvin Rutledge KC of Cornerstone Barristers and Genevieve Screeche-Powell of Field Court Chambers examine the Court of Appeal’s rejection of a discrimination challenge to Tower Hamlets’ housing database
Michael Zander KC, Emeritus Professor at LSE, tracks the turbulent passage of the Terminally Ill Adults (End of Life) Bill through the House of Lords in this week's issue of NLJ. Two marathon debates drew contributions from nearly 200 peers, split between support, opposition and conditional approval
Alistair Mills of Landmark Chambers reflects on the Human Rights Act 1998 a quarter-century after it came into force, in this week's issue of NLJ
In his latest Civil Way column for NLJ, Stephen Gold surveys a raft of procedural changes and quirky disputes shaping civil practice. His message is clear: civil practitioners must brace for continual tweaks, unexpected contentions and rising costs in everyday litigation
back-to-top-scroll