Capacity continues to exceed demand, with established insurers seeking to defend market share, while new entrants continue targeting the legal sector. Meanwhile, competition is as strong as it has been for many years, particularly in the primary insurance layer. The result is a favourable environment for buyers, particularly where firms can demonstrate strong financial performance, effective governance, and a mature approach to risk management.

Across the renewal cycle, we have witnessed a growing trend towards longer term insurance arrangements, as firms seek to secure highly competitive pricing and greater certainty over future insurance costs. During the past 12 months, there has been a significant increase in the availability of longer-term policies, typically up to 18 months. The growth of longer-term policies reflects both insurer confidence in the sector and clients' desire to lock in highly competitive pricing while conditions remain favourable.

The positive rating environment has been driven by several factors. Firstly, over recent years, insurer profitability across much of the solicitors' market has improved considerably. The hard market of 2020–2022 saw meaningful premium corrections and a more disciplined underwriting approach, which improved portfolio performance and restored confidence among insurers. Secondly, investment income has become an increasingly important contributor to insurer returns. Higher interest rates have improved the ability of insurers to generate income from invested premiums. This is reducing pressure on underwriting margins and enabling greater pricing flexibility.

Finally, competition for high-quality firms has intensified. Well-managed practices with robust financial performance, low claims frequency, and strong risk management credentials continue to attract significant insurer interest. This competitive tension has resulted in downward pressure on rates and an increasing willingness to provide long-term pricing commitments.

Despite these favourable insurance conditions, law firms continue to operate in an increasingly complex risk environment. The growth in cyber threats remains a significant concern, with law firms continuing to be attractive targets due to the sensitive client information they possess and the financial transactions they facilitate.

Claims inflation remains another area of focus. While overall claims frequency has remained relatively stable, the value and complexity of larger claims continue to increase, particularly in areas involving property transactions, corporate work, trusts and tax advice, and complex commercial litigation. Insurers continue to scrutinise firms’ risk controls, supervision processes, and quality assurance procedures.