Irtish insurer estimated to have written cover for 4,000 law firms.
Quinn Direct and AIG were the big winners of market share as solicitors rushed to renew their professional indemnity (PI) cover last week.
As the deadline for renewals passed on 1 October, some brokers reported that Irish insurer Quinn Direct could have written cover for up to 4,000 law firms, representing about 40% of the legal market.
Brokers said Quinn Direct had priced its business very competitively.
Quinn Direct was unable to confirm the 4,000 figure.
Meanwhile, AIG enjoyed a rush of business from the middle and lower end of the market following the bail-out of its parent company by the US government.
Lex Baugh, chief executive of AIG UK, said: “In the solicitors’ PI renewals, we saw excellent levels of new business and strong retentions.”
There appeared to be an increase in the number of firms unable to find cover, largely a result of insurers distancing themselves from the perceived risks posed by smaller law firms that undertake conveyancing.
Simon Lovat, divisional director of the UK professional indemnity division of United Insurance Brokers, said the number of firms unable to find cover before the deadline was “more than normal”.
“There are more than a dozen firms that approached us that have gone into the ARP [assigned risk pool] and we are working with to obtain insurance,” he said.
“For some firms it was cheaper to obtain run-off insurance than to purchase new qualifying insurance. This was an unusual situation that doesn’t always seem to make obvious commercial sense.”
The ARP provides cover for firms that cannot get cover from qualifying insurers or cannot afford the terms available to them. The cover, which is expensive, is underwritten by the qualifying insurers in the same proportion as their share of the premium income from compulsory cover.
A Law Society spokesman said the number of firms in the ARP last year was below 100. The exact number of firms entering the ARP this time will be known in mid-November.
Marsh reported a widening gap in rates for solicitors’ PI between larger and smaller law firms. While rates remained soft for larger firms, some practices with fewer than five partners and sole practitioners involved in conveyancing were hit with premium increases of 100% on last year.
Sandra Neilson-Moore, European practice leader for law firms’ professional indemnity at Marsh, said: “It will financially damage very small firms. It is certainly not the Solicitors Regulation Authority or Law Society’s fault. It’s a general economic malaise and it’s catching these firms up.”
