Insurers threaten hikes as negligence claims rise

Professional negligence claims against solicitors have rocketed, prompting underwriters to warn of a 10 per cent hike in solicitors’ professional indemnity (PI) insurance rates.

Professional negligence claims against solicitors have rocketed, prompting underwriters to warn of a 10 per cent hike in solicitors’ professional indemnity (PI) insurance rates.

The total number of professional negligence claims reaching the Chancery Division of the High Court in 2008 jumped to 147 from 62 in 2007, a rise of 137 per cent. When claims against ­solicitors are isolated, the rise is 158 per cent, up from 31 in 2007 to 80 in 2008, research by Reynolds Porter Chamberlain has found.

Professional negligence claims are expected to flood the financial services market as the recession deepens and clients look for compensation for bad advice.

Lawyers will be a prime target, with fraud claims already beginning to mount up.

Jon Davis, general manager for solicitor PI insurer Travelers, said post-9/11 PI rates rose because of an outward flow of capacity from the insurance sector. He added that “this time around it’s driven by claims against the lawyers”.

Ashurst director of risk management Chris Vigrass rejected calls for a rate increase.

“The top 20 firms have about £200m worth of coverage,” he said. “We shouldn’t see any mark-up on renewal. If activity is down 10 per cent the risk should be offset, so the rate should come down.”