Rivals argue that other insurers are unfairly reducing the amount they pay into the assigned risk pool

Insurers are planning to lobby the Solicitors Regulation Authority (SRA) for an audit of the books of all solicitors’ professional indemnity (PI) insurers, after complaints that some are not paying their fair share of the assigned risks pool (ARP).

Several insurers are unhappy that rivals use ‘minimisation techniques’ to reduce the amount they declare to the SRA.

The tactic means they pay less for the ARP, in which solicitors’ unpaid claims are split proportionately to insurers’ share of the open market.

Insurance Times understands a number of insurers want the SRA and Legal Services Board to ensure that all insurers’ figures comply with the rules laid down in the SRA’s Qualifying Insurers Agreement.

However, an SRA spokesman said no requests for an audit had been received so far.

Insurers handed in their final figures relating to solicitors PI written on the open market to the SRA last month. Premium written on the open market had dropped from £241.48m in 2009/10 to £213.5m in 2010/11.

United Insurance Brokers’ PI divisional director Simon Lovat said minimisation techniques were in line with SRA rules, but took advantage of the minimum terms and conditions laid out by the authority in 2000.

One approach involves insurers putting an unusually high portion of premium into the excess layer of a policy, reducing the amount of premium to be declared for the primary minimum limit.

Under SRA regulations, the insurer only needs to declare premiums for the limit required under the minimum terms and conditions. This can leave a significant part of the premium undeclared if the premium is ‘transferred’ to the excess layer.

Chartis, the professional indemnity insurer with the biggest market share, has been vocal about the need for reforms to the ARP.

As reported in Insurance Times last week, it called for measures such as a levy on the profession to pay for the ARP and more restrictive terms and conditions for ARP solicitors.

Other proposals include allowing insurers to avoid paying claims where no premium is paid or there has been misrepresentation by the customer.