Partners in planning by Janine Parker, Paragon LawSelect
This article was also featured as a column in the February 2016 issue of LPM. To read the issue in full, download LPM.
With the regulatory and legal landscape in a constant state of evolution, what services should you expect from your insurance broker, and how have these expanded over the past decade? Traditionally, a broker will represent your risk in the marketplace and offer you a range of quotations from different insurers to cover it. Since the demise of the Solicitors Indemnity Fund, open market insurers have faced numerous challenges and systemic claims in the form of the Accident Group, miner’s claims, lender claims from conveyancing, and general losses.
Many insurers withdrew from the market due to the losses in their portfolios being unsustainable, and this saw a space open up for unrated insurers, which temporarily solved a problem for the SRA and some practices. But given the track record of many unrated insurers in the marketplace, this was never going to be a long-term solution for a stable marketplace. Unrated insurers have all but disappeared and A-rated insurers are now creating good competition for practices, leading to moderate rate reductions and the removal of market volatility that hampered firms in the past.
Over the past 15 years, brokers too have had to adapt and develop their offering to law firms. Brokers had the task of bringing new insurers into the solicitors PI market, often by using the strength of their relationships. In addition, insurers had to be convinced that there was a way of writing solicitors professional indemnity profitably, and brokers with direct relationships had to consider how they could assist this. The result was an enhancement of the risk management services brokers offered – first for the benefit of their clients and second to demonstrate to insurers a differential that would improve the performance of their portfolios.
This started with Lexcel consultancy, but has moved on considerably since. Risk management encompasses a number of different components that have expanded again in recent years. Since 2001 we have been in contact with over 4,000 solicitor practices, whether as clients or prospects. This gives us a unique insight into the profession and gives us first-hand experience of the plethora of challenges faced by SME law firms. In turn, our solutions and offerings have evolved using this experience to pass on insight to clients.
Business management is now a key element of support offered to firms. No longer is it sufficient to just offer broking, training, claims advocacy or risk bulletins. Firms can now expect assistance with business continuity and planning, marketing support, assistance with complaints management, business efficiency reviews, dedicated helplines, merger and acquisition advice, regulatory support and access to best practice document libraries.
Often many of these services will be sourced by your broker and provided by third-party experts, but what’s clear is that the role of traditional insurance broker is changing into that of a strategic partner. There is much more emphasis on consultancy and providing firms with a comprehensive risk and business management service. All these advisory components are, of course, interlinked, and it’s no coincidence that well-managed firms are usually more profitable and have better claims records than their peers. A well-managed portfolio allows the broker to negotiate more competitive premiums and therefore a positive cycle is created.
We are all part of a service industry, so ensure that your firm is obtaining the best service from your broker.