Smaller firms bear brunt as insurers raise professional indemnity rates

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  • This year has yet again shown why the PII market needs to change, either back to a SIF model or the introduction of variable renewal dates.
    The logic behind some of the decisions to reject cover or hike premiums have been astounding; it appears to me as someone who has just negotiated a renewal that it does not matter how good your systems, risk profile, etc, insurers will use their own 'commercial' criteria to try and justify their positions. How can it be right for a sole practitioner who has a clean record to pay £20,000 one year yet this year pay £60,000 without any reasons given?
    The legal press has recently been full of adverts/articles from consultants and the Law Society saying how they can help you to obtain good rates for cover; how is this so, are they also the Chief Executives of the PI insurance companies, it seems to me that unless they are they have no influence whatsoever?
    The issue needs to be tackled quickly before more firms go to the wall!

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  • i agree. pi insurance has gone up to 10% of the total turnover in my firm. there is not enough competition between insurers. for small practices there are only 2 or 3 insurers. there does not seem to a positive correlation between risk profile and insurance quotes. the sra is happy to regulate firms but cannot regulate the insurers properly. a job half done by the regulator.
    insurers are profiteering where they can. my rates have gone up 250%. run off insurance will be extremely expensive if i want to close down. the lack of action from the sra shows how they are happy to see small firms go under.

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  • People have got to remember, the Law Society and the SRA serve themselves. They create cushy jobs for ex-lawyers who never managed to get off their high horse. Both are a waste of money that exist just to show clients and the public that firms are regulated. They squeeze everything out of lawyers and firms, yet give nothing in return. Abolish them both.

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  • Just as Clementi rules come in allowing the big corporates into the law industry so the same big corporates are squeezing the life blood out of small firms. A really easy way to get rid of the competition especially as over 70% of law firms are 5 partners or less. If conveyancing was so risky why are the Co-Ops of the world gearing up to enter the market? One wonders whether markets are dictating terms for PII or whether there are other forces at play especially when one sees the total inaction of the Law Society and SRA when small firms have their backs to the wall.

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  • it is a little odd that everyone is annonymous.

    we all know that if the sra knew who we were we would end up with a "monitoring visit"

    at the end od the day who cares if we sole practioners go out of business.

    It's better to have the tesco and co-op type organisations running things.

    This is a truth that we cannot get away from.

    The SRA think this way and are therefore doing their best to let them go under.

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  • I have recently published an article on this matter. It is essential that the single renewal date scheme is changed to prevent a breakdown of trust between insurers and solicitors. See website Flaxman Partners / Articles/Solicitors' PI Renewal Prospects for October 2009

    Or contact me for pdf version if you are interested.

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  • Do you think many of the smaller firms will be forced into bankruptcy as a result of the increase in the PI premiums. I ask because I work in insolvency and have been given two seperate bankrupt law firms to adminster this week. Am I seeing the start of something here?

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  • The issue of indemnity insurance can be solved by having an indemnity insurance cover from the SRA, in this respect a collective idemnity isurance cover can be setup by SRA, where firms pay depending on the size of the firm and the areas of law they practice keeping in view the risk factor as well, the level of risk and what will be cover needed for the type of risk.
    I think this is time for SRA to stand up for those who are suffering and think they made a mistake by joining the profession.

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