After three years of cheap cover on the open market, law firms this year will pay more for their primary-level insurance than they did in the year that the Solicitors Indemnity Fund (SIF) collapsed.
The total contribution law firms will pay this September for their first £1m of cover is predicted to rise by 20 per cent. This rise would see it hit £270m, £20m more than the £250m paid in 1999, the last year of SIF. In 2000, the first year on the open market, total premiums went down by more than £100m to £147m. In 2001, the total contribution was £160m, which raised to £225m in 2002.
Liz Mullins, the executive director of professional risks at Aon and the former head of SIF, told The Lawyer: “Everyone in the market is agreed that there is going to be a 20 per cent increase.”
Sarah Clover, professional liability partner and head of the solicitors’ group at Barlow Lyde & Gilbert, explained that law firms have come to the end of their honeymoon period with open market insurers. “I think it’s been inevitable since the beginning of this market that prices will go up, especially since rates have hardened across the whole market,” she said.
A new Lloyd’s broker, Holman, has teamed up with specialist insurer Hiscox to open a book of business for solicitors, targeting 5 to 15-partner firms, in time for this season’s renewals.