Indemnity premiums escalate as firms told to expect an upturn in claims
Professional indemnity premiums are rising, amid a growing number of “potential claims” against law firms.
The Law Society last week launched a package of advice and free seminars on renewing indemnity cover in response to insurers’ pressure to raise premiums. The package includes a series of free seminars and one-to-one consultations with a broker, and a practice note.
Frank Maher, partner, Legal Risk, says the advice was helpful in that it “emphasises the need for firms to get on with it”.
“The Law Society guidance recommends that firms start thinking about insurance in May, and sending out proposal forms in June. I think that’s sound.
“It’s good in that it emphasises the need for risk management. It mentions Lexcel as a tool to help in that aim. The problem is that people sometimes see Lexcel as the start and finish, when it is really the beginning of the journey,” he says.
Solicitors have to renew their insurance on 1 October. However, many solicitors want the single renewal date to be abolished.
Maher says: “The Law Society has in the past looked at this as an issue that relates only to the cost of insurance and the need to make sure firms have got it in place.
“Cost is no longer the only issue for law firms. Last September, there was concern over AIG. What if a major insurer was to fold in the weeks leading up to the renewal date? There is a risk management issue there.
“The vast majority of firms want a flexible renewal date. We are the only profession in this country that has a fixed renewal date.”
He adds: “We are seeing a large number of potential claims in relation to conveyancing. We are not seeing the claims coming through yet but that may be because the lenders haven’t been able to sell the properties. Once we see an upturn in the property market, there may also be an upturn in claims.”
