As the October 1st deadline for Professional Insurance Indemnity (PII) approaches the number of solicitors requesting payment in instalments has increased.
PII is an essential requirement for the legal profession. It enables companies to trade legally and is one of the largest annual expenses occurred by legal professionals.
However, concerns have been raised by legal experts over cancellation requests due to unpaid policies and the Law Gazette has said that firms are being urged to speak to brokers, such as V4B Business Finance, now and to be prepared for an increase in costs since they last renewed.
The Solicitors Regulation Authority (SRA) is attempting to mitigate the issue by reviewing its supervision and enforcement processes but PII cover for solicitors could become unsustainable if underwriters are not allowed to cancel policies where the premium is not paid, the International Underwriting Association has warned.
The association has discussed the minimum terms and conditions of such policies with the SRA and has set out its concerns in an open letter to the legal industry. It calls for a right to cancel cover if premiums are not met, particularly for run-off cover, and the payment of excesses on a policy to be mandatory.
Without such measures it is likely that insurers will become more selective in the risks they accept and smaller conveyancing firms that generate lower premiums could face a restricted choice and higher costs for cover.
Chris Jones, director of legal and market services, at the IUA, said: “Many solicitor firms are facing economic pressures and we have already seen an increase in requests for payment of premiums by instalments.
“Insurers have shown their willingness to work with other professions that are struggling to mitigate the short-term economic effects of Covid-19, but the complete lack of any protection around payment of premium and excesses makes it far more difficult to do this for solicitors.
“It is not proposed that there should be any change in the scope of insurance offered. Our objective is to better manage policies to ensure that solicitors pay for the cover that is being provided to them. This will benefit the market by providing long term confidence in the availability of cover and giving insurers more flexibility to develop bespoke arrangements for their clients.”
Firms are being advised to review their budgets and make plans for increased premiums, which could include premium financing to spread out payments. CLICK HERE for information on PII finance.
The Law Society has previously advised against solicitors reducing the amount of cover required as cutting back mandatory PII for solicitors would be bad for partners, law firm employees and clients.
Law Society deputy vice president Simon Davis said: “Clients, employees and solicitors would bear significantly higher risk, but there is no evidence this would be counterbalanced by lower insurance premiums.
“Solicitors and their clients are protected by copper bottomed insurance, which is appropriate given the gravity of many of the issues we deal with for businesses and individuals.”
V4B Business Finance has a dedicated PII finance facility allowing premiums to be funded in easy instalments over the term of the policy. Using a PII finance option allows companies to free-up cash flow and use working capital for alternative business uses.
Low interest rates and credit decisions can be made quickly, and we have assisted thousands of legal firms with PII funding. As a broker we have access to a wide range of funders providing some of the most competitive rates on the market.
You can benefit from setting up an instalment plan early for your PII. We can secure your funding quickly and efficiently thanks to our coverage of the market. We have over 100 years combined experience an excellent 99% acceptance rate.
Benefits of PII funding with V4B Business Finance:
- Unsecured funding for insurance policy and/or practicing certificates
- Flexible repayment terms up to the period of insurance
- We can pay your insurer directly
- Spread the cost of repayments over six to 18 months
- Retain capital and stabilise cash flow
- Borrow up to £150,000 without guarantees
- Dedicated account manager
- Fixed interest rates and costs
The government’s Coronavirus Business Interruption Loans Scheme (CIBLS) has provided a lifeline to thousands of businesses during the pandemic. V4B Business Finance is an accredited provider of loans under the scheme, but as it closes to new applicants at the end of September businesses are urged to secure finance now before it is too late.
For more information on PII funding or the CIBLS scheme:
Call: 01978 668969
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