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PII in the sky? Why choosing the right professional indemnity insurance solution needn't be a gamble

PII in the sky? Why choosing the right professional indemnity insurance solution needn't be a gamble

The professional indemnity insurance (PII) landscape is evolving. Following a recent tendering process, the Law Society of Scotland has appointed insurance brokers Lockton to administer and broker its Master Policy of PII from 1 January 2017, replacing current service provider Marsh who has presided for almost 40 years.

The Master Policy is the compulsory PII arrangement which covers all Scottish solicitors working in private practice and one of the most important areas of consumer protection put in place and required by the Law Society. It remains to be seen whether Lockton will introduce new processes and procedures which firms must adhere to when renewing. But this is not the only change on the horizon which could impact the PII market.

Brexit may lead to an increase in the volume of claims in particular areas such as the residential property market, litigation work, tax planning and pensions due to a tightening economy. In addition law firms' susceptibility to cybercrime, which recently saw funder Elite withdraw from the solicitors' PII market, may trigger a rise in premiums. Some firms may even struggle to find cover unless they can demonstrate that they have robust IT systems and preventative measures in place.

Cyber attacks are now considered to represent one of the greatest threats to the legal sector. Leading commercial finance providers can offer affordable payment over time solutions to enable law firms to invest in vital security technologies such as modern encryption software, IT support and maintenance to guard against malware and phishing scams.

And while no business may ever be 100% secure, at least law firms can demonstrate they are doing everything they can to protect and maintain the trust of their clients to reduce the prospect of claims being made against them. Specialist providers can offer cyber insurance solutions covering loss in the event of a data breach and premiums for these insurances can also be paid over time using finance.

Choosing the right financial partner therefore requires careful judgement. Law firms must not only consider the financial stability of the providers they evaluate, but of equal importance is the insurance broker's understanding of specific market requirements and mandatory insurance requirements for the legal profession.

Where possible, firms should seek an experienced supplier who can source and secure the right insurance premium for them as well as funding it. Specialist finance providers can offer flexible payment solutions to enable the cost of PII premiums to be spread over a period of 12 months (or 18 months if applicable). This helps legal practices to avoid significant troughs in their cash flow and preserve working capital for other vital areas of the business.

Choosing the right finance solution doesn't have to be a gamble. As the only endorsed finance provider to the Law Society of Scotland, as well as the Law Society of England and Wales, solicitors can be assured that Wesleyan Bank has the expertise and knowledge to support your practice.

Read: PII funding for Professional Practices

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