The findings of the recent Law Society PII survey have been announced. The survey asked 399 law firms and 359 black and minority ethnic (BME) firms about their experiences and views about the PII renewal process.
Significant Findings of the Survey
Law Firms Findings
The 2010-11 survey found that a lower percentage of firms reported having no problems with their renewal process (63.5%), compared with the previous year figure of 79%, suggesting it has been more difficult this year for firms to renew their policy. Interestingly, there appeared to be a correlation between firm size and renewal difficulty; the smaller the firm, the harder the renewal process seemed to be. The survey points out that a contributory factor to this correlation may be due to the fact that the insurance company Quinn, which previously had insured many small firms, had withdrawn from the PII market.
Another significant finding was that in previous years, it was found that many firms were able to renew their policy with the same insurer. This year, however, almost a quarter of firms reported that they were unable to renew their policy with their existing insurer, due to the fact that many insurers were ceasing to serve their type of firm, or had withdrawn from the PII market altogether. Again, the withdrawal of Quinn from the PII market was cited as a primary reason for this.
It was also found that in 2010 a disproportionately high number of sole practitioners received at least one quote refusal, in that they constituted half of the surveyed firms receiving one or more refusals, despite this group making up less than two-fifths of the law society.
In terms of renewal cost, a greater percentage of firms (almost 70%) reported a higher renewal cost than firms surveyed the previous year (62%), and a smaller percentage of firms reported premium decreases.
It was found that a similar percentage of law firms applied to enter the assigned risk pool in 2010-11 as had in the 2009-10 survey.
BME Firms Findings
The survey continued and extended work started in the 2009-10 survey to investigate whether there was any discrimination against BME firms when renewing their PII. To do this, it was necessary to compare BME firms to similar-sized non-BME firms, as the majority of BME firms are small, having less than five partners. The survey found that almost one third of BME firms experienced difficulties in renewing their policy (27.9%). Although this is a disproportional figure compared to wider membership, it is more likely to have resulted from the small size of BME firms rather than their BME status.
Moreover, only 4.4% of BME firms surveyed reported that they felt their ethnicity had been a factor in calculating the premium they paid.
Similar to other law firms, BME firms reported difficulties in renewing their policy with their existing insurer. Again, this is largely down to the withdrawal of Quinn, with whom many BME firms were insured.
In terms of premiums paid, small BME firms paid less than comparative small-non BME firms. This difference could be attributed to BME firms’ lower claims history, as it was concluded that the BME status of a firm did not have an impact on the cost of their premium.
The survey found that BME firms were disproportionately represented in the assigned risk pool (ARP). However, due to the small number of ARP firms in the population sample, it was not possible to undertake a robust analysis to explain this.
Overall the survey concluded that, based on a comparison between BME firms and non-BME small firms, there were no significant differences in outcomes or the prices of premiums. It was concluded that the BME status of a firm, as well as the types of work undertaken, were not contributory factors to a PII premium.
To view the complete report, please visit www.lawsociety.org.uk
