THE LAW Society and the Solicitors Indemnity Fund (SIF) have reacted furiously to last week's claim by The Lawyer that a table attached to the society's indemnity insurance consultation paper is flawed.
Most firms on the table would do better sticking with SIF rather than insuring on the open market. We believe the figures are skewed in favour of SIF. On average, firms contribute 3.5 per cent of their gross fees to the fund, but the average contribution being made by the firms on the table is half that figure.
The Law Society has pointed out to us that the average contributions being made to SIF by the firms on the table was brought down by the fact that six very large firms were included on the list to ensure that the larger commercial practices were properly represented.
This raises more questions than it answers. Five of these firms do better under SIF. On the surface this would appear to suggest that the November Group of law firms, which wants firms to be allowed to insure on the open market, has been wrong all along. A closer look reveals a different picture.
The Law Society's own consultation paper admits that private insurers would be better than SIF at assessing the insurance risk posed by individual firms. Yet according to the table, the largest firm, with a turnover of £100m, would pay four times more for its insurance if it went on the open market than if it stuck with a reformed SIF.
Elsewhere in the paper it is claimed that insuring on the open market would cost the firms on average an extra 30 per cent. And yet here is a firm whose open market quote is over 400 per cent more expensive than SIF.
Either SIF is being far too generous to this particular firm or the open market quote is vastly over-inflated. Either way, something does not add up.