One of the most common questions we receive from the many Tennessee law firms with whom we work center around why their premiums continue to rise year after year. In most cases, there have been no claims reported and the areas of practice have not changed in drastic fashion either. This has been the source of much confusion and frustration. We have even had attorneys’ tell us they feel singled out by these large faceless insurance companies located in faraway places!
I always compare this to my experience in purchasing life insurance. The first time I ever purchased life insurance, I was in my mid-twenties. I could purchase millions of dollars’ worth of coverage, and it didn’t cost much. I never knew my life was so valuable! Fast forward 10 years. My wife and I now have a 4 year old princess, a 1 year old baby boy, and a dog named Action Jackson. While we don’t have the white picket fence we’re Livin’ the American dream! Imagine my shock and dismay when we re-evaluated our life insurance last year. Premiums were significantly higher in my mid-thirties (when, in my opinion I need this valuable coverage much more now with above mentioned obligations). This isn’t rocket science, folks! I’m a lot older now, my health isn’t quite as good as it was 10 years ago, and I fly airplanes on a fairly regular basis. Also, none of my clothes fit from 10 years ago. At the end of the day my life insurance company is taking on a lot more risk now than from 10 years ago. They are charging a premium commensurate with that higher risk. The same idea applies to my lawyers’ malpractice insurance carrier. The good news- unlike my life insurance, malpractice insurance premiums tend to level off at the 5 year point (five year being from the point coverage starts, so is possible that an attorney with a major law firm for 10 years starts a solo practice. In this scenario, in most cases, the five year clock would reset despite the fact that said attorney has 10 years’ experience)
Written by Graham Swafford