Professional indemnity special: Division sign

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  • I am not sure I agree with the comment 'Brokers that complain about the presence of unrated insurers in the market are able to complain because they are aligned with rated underwriters.'

    However, whether it is true or not, what can be said with certainty is that brokers who promote the use of unrated insurers do so because the are aligned with unrated insurers.

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  • There is a distinction to be made between 'unrated' insurers who insurer firms within their capability and 'unrated' insurers who do not.

    Balva's demise was partly due to them over capitalising themselves, something that Berliner are attempting to do and Lemma did. 'Unrated' insurers who make themselves sustainable by writing a manageable amount of premium with the right reinsurances in place will be a boon to the market, see the prolonged success of Alpha as evidence.

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  • Large firms might become more interested in the problems of small firms' insurances if (or when) the cost comes back to them through Compensation Fund contributions.

    A client law firm who had insurance with Lemma was outside the limits for Financial Services Compensation Scheme cover (which only covers 90% and has certain limitations) and faced a £400,000 lender claim plus another £30,000 private client claim. Fortunately we sorted matters out, but there are other firms with similar issues. Balva is said to be solvent, but were it to be otherwise, there will be problems.

    Simply requiring rated insurers only for compulsory cover is not the answer, even if that is legally possible (as to which there is doubt): a large proportion of the profession either cannot afford or simply cannot obtain rated cover. The breadth of cover makes many firms unattractive to insurers.

    There is an enormous disparity between the requirements of the different legal professions, as identified in the Legal Services Consumer Panel report to the Legal Services Board. No other profession's requirements are as comprehensive as the SRA's. Our current model is at risk of becoming unsustainable. It is time for a rethink.

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  • I am offering in conjunction with other industry experts a pre renewal PI insurance audit. This will highlight the risk management controls and quality assurance in place in the firm. The purpose of the audit is to help identify any areas where the firm may be deficient prior to the broker going to market. This should improve both the policy that the broker can offer as well as the premium

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