LAW firms should be allowed to arrange their own indemnity insurance cover in the open market rather than be forced to use the Solicitor's Indemnity Fund (SIF), leading City insurance lawyers said last week.
City firms and other lower-risk practices could save money on premiums by reducing the number of insurance layers involved, they said.
This would also avoid potentially complicated monitoring of large claims.
Their views came as responses to SIF proposals to shift the insurance burden onto almost 2,000 higher-risk firms (The Lawyer 23 January).
Davies Arnold Cooper partner Mark Scoggins, an indemnity insurance specialist, said: “I think the case for an alternative is clearly made, because of the substantial number of firms with excess cover.”
Scoggins said that while the Law Society had an obvious need to ensure the vast majority of firms had a basic £1 million per claim cover, the firms with large insurance needs would be better off if they could make full use of the open market.
Market insurers could typically give a first-level cover of £10 million or more, depending on risk. Cutting out the SIF would therefore reduce the numbers of insurers – and their solicitors – involved in monitoring claims, and so reduce the existing chances for disagreement on risks, said Scoggins.
David Wilkinson, partner of insurance firm Berrymans, agreed. While welcoming the SIF proposals as a step forward, he said he and others wanted SIF to go “much further” towards the open market.
But he warned that leaving the SIF with “uninsurable” firms must be avoided. However, partnership specialist Ronnie Fox, of Fox Willliams, defended SIF as “doing a good job at reasonable rates” and warned against allowing the insurance market to effectively dictate whether certain solicitors should be able to practice.
The society's consultation deadline is the end of March.