What is happening with the Master Policy renewal this year, what is changing and what actions firms should take as part of the process

The Master Policy continues to underpin the profession in Scotland and work is already well underway in preparation for renewal this year. So, what can you expect to see, what do you need to do and what will the process feel like for 2018?

What will you need to do?

Review your claims

If you haven’t already, you will shortly receive from insurers, RSA, the claims “snapshot” for your firm as at 31 May, the cut-off date for claims for the renewal in November. New claims or developments in existing claims or circumstances after 31 May will not affect your 2018 premium calculation.

Action: You should review this claims information and make sure it reflects your own understanding of the correct claims status as at that date. If you believe that a claim should be shown as “closed” or a reserve amended, you should make representations to RSA at the earliest opportunity.

Complete the online renewal process

Matter: We are continuing with the online process for this renewal.

Action: Once you receive our renewal communication you will need to log in to your portal via the Lockton Scottish Solicitors website www.locktonlaw.scot. Your user name is your practice’s principal contact’s usual email address, as previously. If you have forgotten your password, simply click “password reset” and you will receive an email to enable this.

Matter: We will be able to pre-populate some parts of the form for you this year, e.g. principals, contacts and address details.

Action: You need to check the pre-populated information and make any necessary amendments to bring it up to date.

Matter: Completing the firm’s financial information is the part of the proposal form that causes firms most difficulties, year after year. We continue to require details of your total fee income for the most recently completed financial year, and an estimate of total fee income for the current financial year. We will also continue to seek a breakdown of your fees by area of practice.

Action: Early preparation of this information will assist in ensuring a smooth and quick completion of your proposal form.

What is Lockton doing?

The feedback we received on the online renewal process from last year was largely positive, but there is always room for improvement, so we have been working to make things better for this year.

Proposal form questions

We received feedback on the proposal form question relating to work carried out or clients based in sanctions-listed countries. We recognise the challenge this presented to firms trying to provide accurate responses to this question whilst not wishing to disclose confidential client information. So, following discussion with underwriters, it has been agreed that this question will be removed from this year’s renewal proposal form.

Speed of the website

For some practices – mainly those with a large number of principals – the system could be slow and sometimes frustrating. We have looked to address this from a technical perspective and we are confident it will be a positive experience for all firms this year.

Rates and rating factors

You may remember that last year we negotiated a three-year deal for renewals 2017 to 2019. The deal drives a reduction in the global premium (the total premium required by insurers) subject to certain conditions in respect of claims and economic factors being met. We’re pleased to announce that insurers have confirmed that the conditions have been met, and for the 2018 year the global premium will be £16.55 million, down from £17.5 million for 2017.

The 2018-19 rates and rating factors will soon be finalised and made available to logged-in users of the Lockton website.

While the process for calculation of each firm’s premium will largely be the same as last year, there will be some slight amendment to the discounts and loadings thresholds on a few aspects. Some have already been agreed with insurers and others are currently under discussion.

At present firms with an income of £70,000 or less are entitled to a 48% discount on premium. However, if income increases to £70,001 or above, that discount is lost in its entirety. So we have introduced a new discount of 25% for firms with income between £70,001 and £100,000 in an effort to smooth the impact of any increase in fees for smaller firms.

Separately, we have also agreed to introduce a discount for firms where the past gross fee income per principal is less than £50,000. This will not be applied in addition to the low income premium discount: only one of these discounts will apply.

We are reviewing the self-insured amount for low income practices with a view to agreeing a reduced per-principal self-insured figure for these small practices.

In a balancing move, consideration is being given to a small increase in the current loadings applied to practices where the gross fee income per principal is over £500,000.

Communications you will receive

We shall contact you during the first week of August to let you know that the online renewal proposal form is “open”, and to guide you to supporting materials such as the Guide to the Master Policy and the
2018-19 rates and rating factors. We will provide reminders and tips on the completion and submission process between August and November.

You will also be able to obtain quotations for Master Policy top-up insurance, fidelity and cyber covers using the information submitted within your proposal form.

In the meantime, if you have any questions, your usual Lockton contact will be happy to help. Please contact them in the normal way or call our dedicated Master Policy team number, 0131 345 5599.


The Author
Gail Cook is a client executive within Lockton’s Master Policy team. She has 30 years’ experience in the field of professions underwriting and risk management and is the main Lockton contact for risk management matters. She can be reached on 0131 345 5571 or gail.cook@uk.lockton.com
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