Solicitors' PI primed for shake-up?

The solicitors’ professional indemnity (PI) insurance market has not yet seen the predicted flood of new insurer entrants, but there has been enough activity and rumour in this area to suggest that it can still happen.

The most recent entrant is Axis Specialty, which will be writing solicitors’ PI exclusively through Prime Professions, and Elite Insurance also entered the market earlier this year. JLT has also launched a sole practitioners’ policy with AmTrust.

Three new schemes may not qualify as a flood, but the market is definitely primed for some more fresh faces.

The reason is that this renewal year will see the abolition of the controversial assigned risks pool (ARP).

The ARP was designed to give law firms emergency cover if they could not get insurance on the open market, backed by all insurers writing solicitors’ PI. However, it soon became an expensive burden on insurers, so much so that some invented clever tactics to dodge paying their share of costs coming from the pool.

The right combination

The ARP was almost always quoted as the reason for insurers leaving solicitors’ PI, so its scrapping provides a huge incentive for insurers to join or rejoin.

Indeed, Elite chief executive Jason Smart said his firm had wanted to join the solicitors’ PI market for several years, but had been put off by the ARP.

The scrapping of the pool is also good news for the often unloved smaller law firm partnerships, whose over-representation in the ARP commonly led to high premiums and restricted capacity for this end of the market.

So combine the death of the ARP, the flurry of rumoured new entrants and the traditional late arrival of many insurers to the solicitors’ PI market, and you can expect to see many more insurers taking an interest in solicitors this year.