Insurance broker Aon Risk Solutions has stepped into the breach following the news that XL Insurance and AIG intend to significantly reduce their market share in the solicitors professional indemnity (PII) market.
Aon has extended its exclusive arrangement with QBE Insurance Limited for solicitors PII to include one to three partner firms, after XL Insurance confirmed it would no longer underwrite insurance for those firms.
An XL spokesperson said: “We continue to review our overall PII book of solicitors and are working on pricing and underwriting guidelines to profitably write this class of business over the long term. Unfortunately, current market conditions are not allowing adequate pricing in certain areas of the solicitors class. As such, we are significantly reducing our market share for the upcoming renewal season.”
AIG is rumoured to be withdrawing cover for conveyancing firms but declined to comment when contacted by The Lawyer.
Legal Risk partner Francis Dingwall said that the breadth of cover required by the Solicitors Regulation Authority (SRA) was far greater than that in any other profession and made it unsustainable for some rated insurers.
He said that the withdrawal of major insurers could lead to solicitors being forced to seek PII from unrated providers, undermining the level of protection to clients that PII was designed to provide.
“At the moment the insurer is required to provide six years’ run off cover whether the solicitor has paid the premium or his excess. That puts them off,” Dingwall said, adding that one solution would be for the SRA to narrow the level of insurance cover required.
The news comes shortly after the SRA announced that it is considering the introduction of a financial rating criteria for PII underwriters (27 June 2013) after 1,300 firms were put at risk when Latvian insurer Balva was forced to call in liquidators (18 June 2013).
For more on this topic, read our recent special report, Division sign