Lloyd's broker Carroll & Partners has launched a new professional risks division.

The division will broke a range of professional indemnity (PI) business, though solicitors' risks will be excluded.

A source said Carroll & Partners was in negotiations to recruit a two-man team of PI brokers to supplement the firm's existing expertise.

PI capacity has flooded into the market in recent months. Lloyd's managing agents Markel and Limit recently announced they were upping their UK PI capacities by £22m and £12m respectively.

Last year, Catlin Insurance Company Limited (CICL), which focuses on specialty lines including PI, was launched with a capacity of around £150m. Meanwhile, new Abacus Syndicate 2526, which is targeting £40m of PI business in 2004, began trading this month.

The Lloyd's franchiseboard recently expressed fears that the influx of PI capacity could lead to a price war.

The franchise board has warned managing agents that it will stop them underwriting if there are signs of undercutting on PI rates.