The Bottom Line: Focusing on Financials in Your Professional Indemnity Insurance Proposal
When it comes to completing your Professional Indemnity Insurance (PII) proposal form, financial details are paramount. While the information requested may not always align neatly with the data that comes out of your accounts package or practice management software, it’s crucial to take the time to ensure accuracy. This is your opportunity to present a clear, compelling picture of your financial strength and stability to insurers.
Why financial stability matters to insurers
Insurers have a very real concern about the financial stability of law firms, particularly when it comes to covering the cost of compulsory run-off cover. This cover provides six years of protection against professional indemnity claims after a firm ceases trading, and insurers are obliged to provide this even if the firm cannot pay the premium. Assurance that a firm can meet its financial obligations is therefore high on insurers’ agendas.
The Law Society’s recent report on law firm profitability continues to indicate a reliance on client account interest driving profit margins, with underlying performance issues remaining. Miller’s own 2025 Risk Benchmarking Report suggests that small firms, in particular, are concerned about financial risks. Given these metrics, and the number of high profile large-firm failures in recent years, insurers are looking for positive indicators of sustainable growth, profit margins and cashflow, and are alert to contrary risk indicators.
Preparing for renewal – understanding how your financials read to insurers
As we approach the 1st October renewal deadline for many firms, if you have not already submitted your renewal documentation, take this opportunity to review and consider what they are communicating about your business.
For a fuller analysis, and to download our financial health checklist designed to assist you prepare for your renewal, read here.
If you have any questions regarding your insurances, email [email protected] and one of Miller’s specialists will be in touch.