Broker trade body hits back at Law Society comments on value and unrated insurers

Steve White, Biba

Biba has “strongly rejected” the Law Society’ comments about brokered professional indemnity (PI) cover, calling them “ill-informed” and “self-promoting”.

Last week the Law Society complained about the “instability” of the solicitors’ PI market and suggested that brokered solicitors’ PI does not always give solicitors value for money.

The Law Society made the comments when it launched its own solicitors’ PI insurance service, Chancery Pii, in conjunction with broker Miller.

Chancery Pii offers cover from a panel of insurers rated at least A-. It does not pay any broker commissions or charge management fees. It will also not offer a broker or advisory service.

The Law Society said: “The advice given by some brokers is of variable quality, with some brokers using a disclaimer to avoid liability when placing solicitor firms with unrated insurers.”

The society’s chief executive Desmond Hudson added: “We have had concerns about instability of the solicitors’ PII market, particularly the one-to-four-partner segment, for some time now.

“Many firms have resorted to using an unrated insurer – often because of lack of obvious choice. A number of rated insurers have withdrawn from this segment and the gap has been filled by unrated insurers, some of whom enter for a few years before withdrawing or, worse, becoming insolvent. This is extremely detrimental to the profession.”

‘High number of errors’

However, Biba’ chief executive Steve White (pictured) has issued a strong rebuttal to the comments.

He said: “The Law Society has complained about lack of capacity and price for small law firms’ PI cover; however, the cause of this has been a consistently high number of errors and omissions claims made by small firms.

“Insurance rating is straightforward in the regard that if you have more claims, you will pay a higher premium. Additionally, if the loss ratios are too high, particularly on solicitors’ PI which offer the broadest level of PI cover, providers may pull out of the market altogether. We have seen this happen in recent years.”

Don’t get mugged

White pointed out that Biba has had “lengthy” discussions with Hudson about the issues, including about a voluntary code of conduct.

He said: “They were satisfied that the FCA’s ICOB [insurance conduct of business] rules and eleven principles for businesses already achieved what any voluntary code would look to do.”

He added: “We believe the ability to obtain advice from an insurance broker on how to present your risk to an insurer, good risk management and support during a claim – which are more frequent for smaller law practices – is important. We note that the Law Society’s new scheme does not offer this as a service.

“Following the work we have previously undertaken with Des, we we’re particularly disappointed with the Law Society’s comments, as well as their ill-thought through ‘Don’t Get Mugged by an Insurer’ campaign. We think the Law Society’s efforts would be better placed helping their members to avoid claims in the first place by providing advice and guidance on risk management.”