Small solicitors likely to suffer most as Law Society doubles cover level
Solicitors' professional indemnity (PI) premiums could soar by 30% to meet the higher minimum level of compulsory cover required by the
Law Society, a leading PI broker has warned.
Steven Holland, a director at Alexander Forbes Professions, said the move to double the minimum level of PI cover to £2m from 1 October 2005 would lead to premium hikes.
"Some insurers have indicated that additional premium levels could be up by as much as 30%," he said.
Holland said that small law firms, which tended to buy the minimum level of cover, were likely to be the most adversely affected.
For those firms he predicted that premiums could rise by over 20%.
FirstCity partner Neil Casson said the increase would probably lead to increased capacity entering the market.
He also predicted that the market would become more sophisticated, with the number of specialised packages available likely to increase.
Casson said: "More insurers will become aware of a greater need for solicitors' PI."
He also said he expected the number of insurers in the sector to rise, although he did not think an influx of underwriters would rush into the market.
But, he warned, the ability of an underwriter to refuse cover on solicitors' PI would be "severely curtailed".
The Law Society indemnity insurance limit has stood at £1m for 16 years.