Solicitors should move fast to renew their indemnity cover because the market is getting "worse not better", according to a leading broker.
Executive Director of Heath Lambert Group's Professional Risks division Kevin Culliney said: "Insurers are hopelessly stretched at this time of year as the Law Society insists that all practices renew their cover on 1 September. The smaller firms do not get the attention that they deserve.
"Furthermore, the Law Society's insistence that all practices benefit from the same very wide policy cover is pushing up the pricing for smaller firms. Were smaller firms permitted to purchase slightly narrower cover, prices could come down. It is ridiculous that a small High Street practice has largely the same cover as Clifford Chance."
He believes the hard market will also increase calls for the return of the Solicitors' Indemnity Fund, just a couple of years after it fell by the wayside.
"The smaller firms aren't going to get quotes until the 11th hour and those quotes may well be multiples of their existing premiums. It is likely that certain firms, if they have bad claims records, won't get quotes on indemnity at all. The assigned risks pool is likely to expand significantly.
"Once that starts to happen, the Law Society is going to have to take a look at it and say, well, this is driving the high street practice out of business, and they will be faced with making a policy decision - are we looking at the return of the Solicitors' Indemnity Fund?"
New capital in Bermuda alleviating the squeeze on the sector is a misnomer according to Culliney.
"They haven't got the resource to handle the business. They are offering prices of £5,000 to £10,000 per £1m of cover, when that cover is perhaps available in London for £2,000 - £4,000 per million. Last year similar firms were paying about £1,000 - £1,500 for the same level of cover.
"Where you need them in play - for the bigger practices seeking cover in excess of £100m - they are there, but the Bermuda insurers weren't the big saviour everyone thought they might be for those lower down the food chain."
Culliney's advice to solicitors is to "get in with a good broker" and make sure the "submission is in a good state".
