News detail

From the archive: solicitors’ PI cover

19/08/2008

PI insurers dodging law claims paymentScott Vincent, September 4, 2007

PROFESSIONAL indemnity insurers stand accused of actively looking to find ways of not paying claims as they bid to overcome shortfalls in the premium income they receive from law firms.

With the next solicitors’ indemnity renewal now less than a month away, a leading broker has said that issues surrounding the payment of claims are arising as a result of the slim underwriting margins in the highly competitive line of business.

And with rates set to remain low at the October 1 renewal, Sandra Neilson-Moore, European practice leader for law firms’ professional indemnity at broker Marsh, said that the trend was putting insureds in a difficult position regarding what information they disclosed to their insurer.

"We are starting to see a worrying trend towards insurers ‘taking points’ - looking at policy wordings and looking for ways out of claims and to pay fewer claims," she said.

She said insureds were being placed in a "terrible position" where information disclosed could eventually lead to a non- payment of a claim. "You would not expect [insurers] to do that if they were making enough money on the premium side," she said.

Solicitors’ insurers set to face ‘bloodbath’ if rates fall furtherScott Vincent,July 11, 2006

SOLICITORS’ indemnity insurers have been told to "see sense" and resist pressure to reduce their premiums amid warnings that the next renewal could become a "bloodbath".

As talks continue in preparation for this year’s solicitors’ indemnity renewal - set to take place on October 1 - brokers and insurers are warning that rates are under pressure and the profitability of the market is under threat.

Solicitors’ indemnity cover is compulsory in the UK and the market is divided into two sections. The "qualifying insurers" sector provides cover for around 10,000 law firms, while larger firms - which make up no more than 20% of the market - can buy extra coverage above the compulsory limits through the "excess-layer" market.

According to Paul Towler, managing director of the financial institutions and professional indemnity team at Heath Lambert, it is the excess-layer market that is likely to see most competition at renewal. "I think the renewal will be a bloodbath this year," he said. "Rates have continued to fall across the professional indemnity market but we believe this trend will be exaggerated in the solicitors’ renewals.

Solicitors’ PI challenged by conveyancing risksLiz Booth,July 18, 2005

AS THE renewal season for solicitors’ professional indemnity insurance in the UK launches, a study from Zurich Professional warns that more than half of the professional indemnity claims notified in 2004 related to either residential conveyancing or personal injury litigation.

The study found that in 2004 more than 35% of claims notified were as a result of residential conveyancing, an increase from the 2003 figure of 32%.

These claims arose mainly from a failure to conduct adequate investigations into the title to a property and not identifying and dealing with all the mortgages and other encumbrances affecting the property.

Other causes of claims from clients who had suffered loss arising from conveyancing related to searches, planning issues and appropriate advice on options of co-ownership.

Solicitors’ renewal rushPeta Miller, September 4, 2006

THE MAJORITY of solicitors’ firms have yet to renew compulsory indemnity cover with only weeks to go before policies expire, according to a broker survey of solicitors firms.

Broker PYV found that 89% of 123 UK solicitors surveyed have not renewed professional indemnity (PI) insurance in advance of the October 1 expiry of existing coverage.

"It is very worrying that nearly eight in 10 firms say they have not renewed their PI insurance yet, a last-minute rush will not help firms get the best deal," said Nick Pointon, director of PYV.

In comparison, Paul Lawrence, head of solicitors’ underwriting at Martello Professional Risks, said that only 15% of the firm’s renewal book had signed up for cover so far.

The PYV survey of small- to medium-sized firms also showed that 41% of those practices that have bought coverage, have paid up to 20% less than last year. This is because rates have been reducing steadily while competition between brokers has increased, said Pointon.

But Lawrence said that while rates have come down by around 10% on excess layers of up to £5m ($9.5m) or £10m, on the primary £2m to £3m layer, rates are holding their own.

"Rates are on a par with last year. There will be some firms that make savings because they have an excellent [loss] record and they will see some rate reductions.