2024 PII renewal: are you ready?

Issues on your underwriter’s radar

The latest report from Howden Group outlines the issues likely to be on your underwriter’s radar in 2024. These include:

• Client account management. The report urges all firms to “reassess the controls they have in place for withdrawals from their client account”. Client account management is of particular importance this year following the Axiom Ince scandal, when £66m of client money went missing. According to testimony, the money had been spent on acquiring law firms and properties.
• Firm finances. Continued concerns about the state of the economy mean that a “firm’s financial accounts and future business plans are likely to be the subject of scrutiny “when it comes to PII renewal. Professional advice is recommended if this could be an issue for your firm.
• Property market/conveyancing. Insurers will want to know what firms are doing to manage the risk of conveyancing work. According to Howden, things firms can do to reassure the underwriters include robust and qualitative audit processes, regular training, using tech to reduce risk, and more.
• Building Safety Act 2022 (BSA). Some insurers are now asking in-depth questions about additional risk related to the building safety legislation introduced in the wake of the 2017 Grenfell Tower disaster.
• Cyber security. With more PII claims arising due to cyber related issues, underwriters will want to ensure firms have robust cyber security processes and insurance in place.
• Firms working with sanctioned individuals or entities, or those with clients whose interests are linked to sanctioned territories will come under additional scrutiny.
• AML compliance. Many firms are still lacking when it comes to compliance with the latest AML regulations, so insurers will want to know what firms are doing to manage AML risk.
• Artificial Intelligence (AI). The growing adoption of AI brings new regulatory challenges and compliance risks that lawyers must navigate. The SRA’s latest Risk Outlook looks at how AI is impacting legal services, as well as current and potential developments. Find out more.

• Health and wellbeing. According to the report, while you might not find specific questions on this topic, health and wellbeing is now firmly on the agenda for PII underwriters.

Preparing for PII renewal

Professional Indemnity Insurance (PII) renewal remains one of the most important dates on the legal calendar. The good news is, according to Howden, the PII market remains stable:

• While some new insurers entered the market, none left
• Longer policy periods have started making a comeback
• The increase in capacity saw more competition for good risks.

Nevertheless, firms with “significant claims and unattractive work splits continued to have difficulty finding alternative terms”. In addition, increased levels of scrutiny have made it challenging for some firms.

As ever, we advise all firms to take steps to reduce risk and alleviate any potential concerns to ensure hassle-free renewal.  As a minimum, this means ensuring all the necessary policies and procedures are in place, and that they adhere to the latest Codes of Conduct.

At Legal Eye, we help firms achieve the most favourable PII premiums possible through outsourced independent file reviews, complaint handling, risk and compliance gap analysis, and other complementary services. For a 360 view of your business risk and to help you prepare for your PII applications, call 020 3051 2049 or email bestpractice@legaleye.co.uk today.