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9 August, 2023
As the specialist property and probate regulator, the Council for Licensed Conveyancers (CLC), has always monitored and engaged with the PII market closely to understand how it well it delivers effective consumer protection and supports a thriving legal sector. The CLC is in close contact with the insurance brokers that are signed up to the CLC’s Participating Insurers Agreement, Millers, Howden, Marsh and Hera. Since moving away from a master policy in 2016 the CLC has seen its participating insurers grow from one insurer to five. Most recently the insurer Liberty Mutual Insurance Group Europe SE joined alongside AmTrust, IGI, Chubb, and Arch.
Following the launch in 2022 of a revised and strengthened CLC Participating Insurers Agreement and Minimum Terms and Conditions, 2023 saw a 100% compliance for all terms issued to CLC practices. This level of standardisation is good news for CLC practices, and is evidence of the productive meetings held by CLC with brokers and insurers in the months leading up to and during the PII renewal period.
This year, practices reported feeling more confident about shopping around for best value premiums and more reported improved competition in this year’s market. This seems to be supported by the growing numbers of practices changing their insurer of choice following two years when we saw little movement. An improved choice of insurers has also been a welcome development for specialist probate practices, who have in the past seen less choice of insurers. The improved mix and balance of insurers will also be more attractive to businesses thinking about transferring all or parts of their existing business into CLC regulation.
In recent years, practices with less than two full years trading history had told us that they found changing to an alternative insurer more challenging than more established practices did. This year however, we saw no real indication of this. Indeed, practices were able to obtain terms irrespective of their type of business structure, or the length of time that they had been trading. As you would expect, those practices with less well managed claims histories, or with a history of engaging in high-risk areas of work, were less likely to attract terms quickly. CLC practices are already alive to the risk of accepting work that is outside their area of expertise. Maintaining robust controls around this and keeping records of transactions that show sound judgement and technical expertise, seems likely to be a continuing theme for insurers.
This renewal round saw the introduction of a requirement on Insurers to notify practices of any intention not to renew terms a minimum three months in advance of the 30 July deadline. The CLC introduced this requirement to ensure that affected practices would have a reasonable and practical period to seek alternative PII or trading arrangements to protect the interest of their clients. Practices also utilised the new provision to purchase up to 90-days extended cover if necessary to secure terms or make alternative business arrangements. This helped practices managing planned closures and mergers to focus on the needs of clients and the completion of any advanced transactions, and transfers of instructions in realistic and achievable timeframes. This ensured a much more controlled approach at what can be a challenging time for practice owners and staff.
Each year, Insurers reflect on their risk appetite and 2023 has seen discussion stemming from the requirements of The Building Safety Act 2022. The CLC has been pressing the government to ensure that there is greater clarity over roles and liability in the implementation of the Act, which is aimed at ensuring that buildings that are affected by cladding issues following the Grenfell tragedy. We have been encouraged to see some insurers conduct evidence gathering exercise over a twelve month or so period, to help them assess where there is perceived, and actual risk based on an improved understanding of the typical trading profile and transaction risk appetite of CLC practices. This seems to be a proportionate approach which would not see liabilities fall automatically to property lawyers. While lawyers need to gather and explain information about a property to clients, it is for other experts to make and report on their judgment of the safety of the property.
We plan to provide more analysis of this year’s PII renewal round in the coming weeks.