Solicitors PI battle gathers pace

Since it moved onto the open market in 2002, professional indemnity cover for solicitors has been highly competitive. With all solicitors renewing on 1 October each year, insurers are preparing for the brawl as solicitors begin to approach their brokers.

"It is an aggressive and competitive bunfight," highlighted Aaron Devitt, director of professional and financial lines at RSA, who is relishing this year's battle. Many other big name insurers are also busy polishing their armour, including Norwich Union, Hiscox, QBE and Zurich.

There are over 100,000 solicitors in the UK and most local brokers will have one on their books, often extending to relationships in which they will introduce business to one another. As the majority of the qualifying insurers approved by the Solicitors Regulation Authority are available only via a broker, the market is currently highly accessible. However, this year, many are approaching solicitors with increasing trepidation.

Premiums and prices are being forced down by the competitive nature of single-day renewals. Yet at the same time, exposures have been rising in a domino effect since the collapse of TAG personal injury lawyers in 2004. The economic environment is creating more difficulties as the frequency of claims against solicitors from clients are linked historically to the economy, with exponential increases evident every time that it is in the doldrums.

"Insurers are less keen to write professional indemnity for solicitors," noted Andrew Freyer, director of Finex at Willis. "This means that brokers need to add more value to sell their services as the market becomes less driven by price."

RSA believes that risk management services are key for brokers in this year's turbulent renewal period. The insurer interviewed in excess of 100 solicitors over a six to nine-month period to develop this year's offering, a risk-management product developed with Business-i that offers solicitors a discount on premiums if they follow the recommendations made subsequent to a risk assessment.

The new RSA offering allows brokers to offer risk management consultancy services and the resultant discounts on an exclusive basis. Devitt explained: "Many solicitors complained that they only saw their broker once. Our service means that a solicitor has sustained contact with individuals that demonstrate what the money is for and cultivate return business."

FAQ: SOLICITOR'S PROFESSIONAL INDEMNITY

- Is professional indemnity compulsory for solicitors?

Solicitors' firms must obtain professional indemnity insurance in accordance with the minimum conditions imposed by the Solicitors' Indemnity Insurance Rules, as enforced by The Solicitors Regulation Authority.

- What cover is needed?

Each firm that is not a corporate body is required to secure professional indemnity insurance with qualifying insurers to a limit of indemnity of £2m for any one claim, while most corporate bodies, such as LLPs, are required to obtain the cover to a limit of £3m.

- Where are the rules and regulations laid out?

The rules and regulations concerning professional indemnity for solicitors are laid out in the Solicitors' Indemnity Insurance Rules 2008 document, which is available at sra.org.uk.

- Where can I find out which are the qualifying insurers?

A list of qualifying insurers is available on request from the Solicitors Regulation Authority or online at sra.org.uk.