With less than two weeks to go before the demise of the Solicitor’s Indemnity Fund, market sources say that as few as 10 per cent of firms are signed up for insurance on the open market.
Most of the concern is centred on SME-focused firms with 10 to 25 partners, a sector in which there are still a number of firms that have yet to be signed.
Several insurers have shut their doors to new enquiries after being overwhelmed by multiple applications.
“It is incredibly worrying and it looks as though a lot of firms will be going into the Assigned Risks Pool,” says Michael Rendell, director of insurance brokers PYV.
The Assigned Risk Pool is the safety net set up by the Law Society for firms that fail to get insurance on the open market.
Trevor Moss, director of Nelson Hurst Professional Indemnity, says he received a submission from a top 30 firm at the end of last week.
“A lot of firms are approaching more than one broker but because there are only a limited number of insurers, insurers are receiving more than one submission from some firms,” he says.
Michael Churchman, an underwriter at Cox Syndicate Management, says that submissions are going to each broker in the market.
He says that competition to win the business of smaller firms has led to over-saturation in the market in the last few days, with firms all looking for the cheapest quote.
He warns that the plan to find the best premium could backfire and says that insurance companies could simply shut their doors.
Tindall Riley, the cover holder for Cox Syndicate, has already shut its doors and FirstCity announced last week that it could take no more enquiries and was inundated with submissions.
“Firms not signing up is a big problem and the pool may well be too big to handle,” says Michael Kent, managing director of Saturn Professional Risks.
A spokesperson from the Law Society says it is monitoring the situation very carefully. “I expect that insurance companies will gear up to meet any last-minute rush,” she says. “But we remind firms that there is not much time left for them to finalise their arrangements.”
Firms that end up in the Assigned Risk Pool by default pay an additional fee on top of the initial 25 per cent of gross fees that firms applying for the pool must pay.
see feature page 18