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Small firms suffer as legal insurers refuse to underwrite in current climate

PII I'm a sole practioner in intellectual property and was told very late on in September that Aon would not renew my cover with them, despite a totally clean claims record and having used them for 3 years running. They helpfully told me that Zurich had also said no. On telephoning around frantically, I was informed by various brokers that only 4 insurers would touch a sole practioner in such a risky area as IP (what this perception of risk is based on, I do not know). These benevolent four insurers included Aon and Zurich. HSBC was the third and they wouldn't even send me a form - there was no point apparently. While my application with Quinn (no.4) was pending, the SRA advisor told me I had to immediately apply for the ARP (and pay 27% of last year's gross turnover - yes, turnover, pre-tax, pre-everything turnover). She said if I was late applying, I would be in default of the rules and would have to pay 47% instead. I told the advisor that either way this was commercial suicide (a spell in the ARP would no doubt tarnish my practice for ever) and I would rather close down and face the run off premium (2x last year's annual premium - a bargain in comparison, until you factor into this the loss of my livelihood). It was only on digging around in the Solicitors' Indemnity Insurance Rules 2007 that I discovered a special "joint venture" between the Law Society and St Paul Traveler, whereby St Paul had committed to quote for all claims free solicitors, regardless of size or practice area. It's rule 5. That's just underneath Rule 4 which is all about the ARP and how much that costs. I had to remind St Paul of their commitment in this regard in order to squeeze a quote out of them and am just disgusted that the SRA would have made me clean out my bank account unnecessarily on account of their ignorance of their own rules. God knows what I'd do if I had any claims against me. I think that would simply be time to ship out of the profession. This isn't an isolated case, all of the other specialist sole practioners I have talked to have had simililarly traumatic experiences and today I heard of a very successful medium sized firm being forced to pay an extortionate premium simply because they were refused cover 2 days before renewal. And this was presented to them as a very special favour by the broker. None of this is in the interests of the consumer, who will be left with no access to reasonably priced practitioners (i.e. those who don't charge £750 per hour for partner time). The 'open market' simply isn't working and we need to take serious action and quickly.

17-Oct-2008

1:31 pm