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Professional indemnity insurance rates for solicitors dropped this year—but experts have warned that such premium prices are not sustainable.
Sandra Neilson-Moore, European practice leader for law firms’ professional indemnity at Marsh, says the 1 October renewal deadline saw competition-driven reductions in rates for most law firms in England and Wales.
Top 100 firms saw drops of 10% or more, with their gross revenues allowing insurers to hold premiums relatively steady, while granting generous reductions in terms of rate on revenue. For smaller firms the competition was even keener.
Andrew Jackson, managing director in Marsh’s UK professional indemnity practice, says: “The singular renewal date is unique to the solicitors’ professional indemnity insurance market and, as a result, firms can achieve reduced premiums as the market strives to preserve its share in the closing days of the process.”
He adds, however, that these competitive pressures have resulted in significantly lower premiums which, although good news for firms, may not be sustainable in the longer term.
Frank Maher, a solicitor with Legal Risk, suspects these premium levels are not sustainable beyond next year at most.
“There are a lot of property and mortgage fraud related claims, and conveyancing firms seem to have forgotten the Law Society’s green and blue warning cards and the lessons learned from claims in the 90s which threatened to empty out the Solicitors Indemnity Fund.”
Some firms, he says, have been declined cover by leading insurers because of claims issues, forcing them to take specialist advice and place cover with insurers who would not otherwise have been their first choice.
“I believe the issue in a couple of years will not be one of price but whether some firms can even get cover at all,” he adds.
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