As the renewal date for professional indemnity insurance (PII) approaches, UK law firms are faced with important decisions that can significantly impact their operations and financial stability.
Professional indemnity insurance is a vital safeguard for law firms, providing protection against claims arising from professional negligence, errors, or omissions that may lead to financial loss for clients. Complying with regulatory requirements and maintaining adequate coverage not only fulfils legal obligations but also safeguards a law firm’s reputation and financial well-being.
PII renewal can present various challenges for law firms. Hazlewoods, a business advisory firm, conducted an analysis of the legal market, revealing that within the first three months of 2023, nine firms were forced to close as they were unable to obtain professional indemnity insurance before their renewal date. Over the preceding 12 months, an additional 37 firms had to shut down due to their failure to secure coverage. The tightening of the professional indemnity insurance (PII) market, driven by an increase in claims, has made it more challenging for firms to obtain affordable coverage. Insurance costs have now become a significant expense for law firms, with PII premiums amounting to nearly 5% of their turnover on average. However, firms heavily reliant on conveyancing can expect to pay as much as 20% of their turnover for coverage. Insurers perceive firms generating over 25% of their revenue from conveyancing work as higher risk for professional negligence claims, resulting in higher premiums for these firms. This issue of escalating insurance costs and the difficulty of arranging PII has been consistently raised by law firms operating on the high street.
It is true, that doing a bit of research and comparing the market for the best rates possible can massively help reduce your rates for PII. However, many law firms still find it difficult to pay their premium and therefore may be at risk of closure. Many therefore require help from external funding solutions. Luckily, Chronicle Law has partnered with The Practice Loan Company, who for the past 24 years, have been helped UK law firms with unsecured business funding solutions for a variety of reasons, such as help with paying their professional indemnity insurance.
UK law firms can greatly benefit from the assistance of The Practice Loan Company when it comes to funding their PII. With flexible repayment terms ranging from 6 to 24 months, law firms can choose a repayment plan that suits their financial capabilities.
Moreover, The Practice Loan Company offers excellent and competitive rates, ensuring that firms can secure the necessary funding without incurring excessive costs. Additionally, the convenience of having all documentation emailed to them simplifies the process and allows easy access to important information.
Furthermore, law firms have the option to pay their practice broker or insurer directly, streamlining the payment process and providing peace of mind. The Practice Loan Company’s comprehensive PII funding services make it an ideal partner for law firms seeking efficient and tailored financial solutions.
If you would like to enquire about how The Practice Loan Company can help you pay your PII, please visit this page and fill out their contact us form. One of their expert consultants that work around the clock for clients will then be in touch shortly.