Law Firms Expect Professional Indemnity Insurance To Rise

 15 September, 2008

-60 percent expect their PII premium to go up this year
-88 percent have been planning ahead and saved money throughout the year to pay their PII premium
 

A recent survey by Key Business Finance*, the profession's finance arm of Heritable Bank, shows that most law firms expect their professional indemnity insurance premium to go up this year. The survey of small--medium firms, with between three and 10 partners around the UK, found that 60 percent expect their PII premium to go up this year, with 37 percent expecting it to stay the same. Only three percent believe that their premiums will go down.

Most firms (88 percent) have been planning ahead and have saved money throughout the year to pay their PII premium. A lucky one in ten does not need to save, but just pay out of cash flow.

Nick Sanders, managing director, Key Business Finance, comments: “Our recent survey findings suggest that many firms anticipate a rise in PI insurance   costs following what have been several years of static premium prices. We have already seen an increase in demand for short-term working capital related loans and anticipate this trend will continue through the current economic downturn as firms look to safeguard their liquidity by maintaining cash reserves. “

“Choosing a specifically designed account to finance PI insurance premiums, such as the PIPs account from Key, rather than using cash or bank overdraft is a prime example of how firms are becoming increasing sophisticated in their financial management. In fact, it is often not a question of whether or not to use finance but rather who offers the best value.  For example, most PI Insurers and brokers provide finance and the easy option might seem simply to accept the installment plan offered with the policy. Despite this, a high proportion of firms choose to reduce costs by using a separate finance company or bank to finance their premiums."