Ink and other brokers report successes despite ‘mess’ of a market
Giles-owned Ink Underwriting is aiming to enlarge its presence in the solicitors’ professional indemnity (PI) market with new capacity providers, following a ‘strong’ year of growth.
Despite Giles’ growth plans, and recent revelations that London market broker Prime Professions has agreements with two new insurers in the pipeline, ABI members have described the market as a “bloody mess”.
Ink was previously teamed with St Giles Legal and Professional Risks, and had sourced its new capacity from Greenlight Re and policies issued through Danish insurer Alpha Insurance A/S.
Ink confirmed it was looking for new providers and expected a deal to be wrapped up within the next month.
Chief executive Mike Smith said: “We’ve had great success and we look to continue that success. The trick is to have a very prudent viewpoint in terms of underwriting.”
The two new insurers to the solicitors’ professional indemnity will add yet more capacity to a very difficult market.
At a conference organised by Greenwood Solicitors, ABI policy adviser Matthew Young speculated that some insurers might drop out because of the problems.
Solicitors’ PI has had a turbulent year, with insurers calling on the SRA to scrap the Assigned Risks Pool (ARP). To underwriters’ frustration, the SRA has said it will only end the ARP in 2013.
“The question people often ask me is why they stay in a market that has been such a bloody mess for a while,” said Young.
“It’s a triumph of hope over experience … We’re looking at a 2011/12 with virtually no change.
‘If you’re an insurer looking at that market, you’ll think: ‘What am I doing here if nothing has improved?’ There must be a temptation for some to get out and come back when we’ve got a few changes.”
Law Society head Elliot Vigar played down suggestions there would be an exodus. He said: “There is always an undertone to this conversation, asking if the fact that the market has not got anything it wanted means insurers will up sticks.
“Equally, for as long as I have been involved in this area, that threat has been present. Insurers would have to consider, if they were thinking of dipping out and in, whether they could regain the market share they once had – loyalty may switch to other insurers. I think new insurers will enter the market this year and next.”
Last month, insurers were told they would have to cough up another £38.6m for long-tail claims emanating from the ARP.
Manchester Underwriting Management chief executive Charles Manchester says he will not go near solicitors’ PI and believes the market is in a dire state.
He said: “Solicitors’ will probably make money once in a decade, so if you pick that one year you’ll probably make money out of solicitors’.”
Pass notes: State of play
What state is solicitors' PI in?
The market is fraught with difficulties, yet the past two years have seen Ukraine-based Lemma, Denmark's Alpha Insurance and Inter Hanover pump in capacity.
Why was the Quinn exit a worry?
It was a problem for brokers that had large agency agreements with the insurer last year. There was a knock-on effect for small law firms of typically one or two staff that were covered by Quinn and struggled to find cover on the open market.
Who will cover the claims?
It's likely that outstanding Quinn claims will partially be covered by the Irish Compensation Fund.