Top tips on preparing for PII renewal from James Brindley of Lockton
It was great to catch up this week with our old friend Jim Brindley, now an Associate at Locktons, and to hear his thoughts on the PII market for law firms.
Q: What are your observations on the current state of the law firm PII market?
A: The insurance market has calmed since October 2022. There is likely to be more choice this year, a new insurer (Fortegra) is likely to enter the market by the October renewal season and we are also seeing more traction from existing insurers looking to do more business, more than we have seen for the past two or three years. It is expected that firms with a lower property exposure are likely to experience the best of the market conditions that this year is likely to bring. From over 500 firms Lockton have managed since the start of the year, we have seen the rate come down for the first time (0.74%) and the expectation is that this will reduce further in to the second half of the year.
Q: What is ‘the right type of firm’?
A: Firms who can demonstrate robust risk management procedures, a proven track record and who can demonstrate a good claims record. Proactive succession planning and a strong balance sheet are also key factors.
Q: What do insurers see as the current biggest risk areas?
A: Four of the biggest risk areas include:
- AML and Sanctions compliance – ensuring firms are compliant with current regulations
- IT security and cybercrime awareness – a key risk management tool all law firms should consider is Cyber Essentials Plus and the education of staff and clients on cybercrime
- Litigation – Those undertaking group litigation work. Certain areas of litigation have caused concern for insurers in recent years, particularly financial miss-selling.
- Building Safety Act – The impact this could have on solicitors and how this risk is being managed and monitored by law firms.
Q: Would you recommend that law firms take Cyber Liability Insurance in addition to PII?
A: Definitely. Cyber Liability Insurance is a standalone policy and should be put in place to manage cyber and data incidents. Both law firm managers and PII insurers gain peace of mind knowing that in the case of a data breach or cyber-attack, an insurer and their specialist team of consultants are on hand to manage all aspects of the incident, including IT investigations, data recovery and client communications/ media management.
In recent years the availability of cyber insurance has become more difficult due to an increase in the number of cyber incidents. Insurers have imposed stricter minimum security standards, such as the use of two factor authentication processes. Discussions should be had with your broker and IT company to ensure the firm is well protected and insurance coverage can be obtained.
Q: What are your top tips for law firms as they approach PII renewal?
A: 1. Prepare early – don’t leave completing the proposal form to the last minute. Discover as soon as practical the terms your insurers are offering and whether these are in line with your expectations and are favourable within the current market environment. Resourcing is stretched across the underwriting market at present, those leaving things late may eliminate choices for themselves due to not enough underwriters being able to review the risk in the remaining available time.
2. Show off the positive achievements in your firm over the last year, such as gaining accreditations, employing additional staff and/or updating business plans for the firm.
3. Be transparent. If there’s a negative, explain fully what happened and how you resolved the issue moving forwards.
Thank you James!