Rangewell

Helping Law Firm Manage Rising Professional Indemnity Insurance Costs

By Rose Brown
Content writer
Published: 12 September 20221 minute read
Helping Law Firm Manage Rising Professional Indemnity Insurance Costs

With costs for PII cover soaring across every sector, the legal professional has been hit particularly hard. Our client needed a way to fund surging renewal costs without impacting business cash flow.

Table of Contents

Professional indemnity insurance is a must for many professional service businesses, but it has a unique importance in the legal sector, where the risk of litigation is high. While there has been an industry-wide increase of around 10% in cover costs, law firms are often those hit with the most significant rises. Subsequently, they face higher premiums which pose risks to existing cash flow. Sometimes, cover costs may even be too expensive to fund via business capital. 

While many professional indemnity insurers offer some form of a monthly repayment plan, it is offered through their preferred finance partner and is on a 10-month rate. Businesses can instead approach the wider lender’s market and find finance for PII insurance that suits their own goals and removes the risk to cash flow. 

In a recent case here at Rangewell, a leading law firm had found their PII cover costs had risen by 17% — a large increase that represented a real risk to cash flow. Rather than defaulting to the lender’s own payment plan, they approached our team for help via PII insurance finance

Why was there a problem?

Faced with rising PII cover costs that impact cash flow, firms have had to adapt to the challenges by approaching their renewal date tactically. Some have been saving cash where possible to pay their premium up-front. Most, however, simply do not have access to the level of liquid cash required to afford their cover quote. 

In addition, as with most professional service businesses, cash flow is tied to client repayment schedules and invoices. If a client is slow to repay, you may be left in a difficult position from which to afford your suddenly steep cover cost. 

For our client, who had been hit with a 17% increase in cover premiums, their business’ overall cash position was not advantageous – partners had been extracting money from the firm to pay salaries and dividends, leaving the business relatively cash-poor. 

With less cash than they needed in the bank and a sharp rise in their premium, how did the team go about approaching their PII cover? Rather than accept the insurer’s own 10-month repayment plan that offered subpar terms, the law firm decided to do some research. 

Why we were able to help

Just as a law firm’s clients depend on their expertise to represent them in legal cases, law firms can rely on our team to represent them in the lender’s market. 

Rangewell’s expert team live and breathes the finance industry. We are specialists in securing finance for all manner of sectors, professionals and requirements – ranging from general law firm finance such as business loans to lending for specific needs such as funding to buy back insolvent assets. 

When the law firm in question approached us, they asked about PII cover costs and how we could help. We immediately got to work by first assessing the business's current position and needs, which we then took to the wider lender’s market.

In the finance world, rates and terms are offered based on risk, and to receive the best quotes, you must tailor your application and negotiate correctly. For the law firm in this example, we did that hard work for them – approaching lenders on their behalf and fielding offers. 

We secured three different offers with finance agreed in just 48 hours, organised the details and helped the law firm choose the option best for them. The finance was drawn down within a week of the client approaching us and was scheduled to meet the insurer’s expected payment dates, meaning the firm could act quickly to renew their professional indemnity cover and remain operating at peak efficiency with peace of mind. 

About finance for PII insurance

As costs of insurance rise across the UK, the professional services industry faces great challenges when seeking to renew professional indemnity cover. Such a critical form of cover can’t be ignored – but businesses are now forced to either pay a larger sum and disrupt cashflow or seek the insurer’s default finance arrangement. 

Heading to the wider lender’s market to secure PII funding will result in favourable rates and terms that suit your business and your forecasts. With the right expertise on your side, you can find a lender who will fund your PII cover and perhaps even help with other financial needs. 

Get finance for your professional indemnity insurance cover today

If you’ve been hit with a sharp increase in PII insurance cost and you’re struggling to find the capital, we can help. Alternatively, if your quotes are still largely the same but the costs will cause issues in cash flow or disrupt growth plans, finance can also be secured to get you insured without the impact. 

Choose Rangewell to act on your behalf today. In a market where lenders need you to apply and negotiate to the best of your ability, why go it alone? You can have our team on your side and secure better repayment rates for your PII cover. 

Raise finance to cover your PII premium

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