Long may market gravity be defied

THIS YEAR'S top-up renewal season looks like being a much quieter affair, without the massive rate rise the insurance market managed to impose last year. The insurance market seems to be back to its old amorphous self with no one quite sure how it will pan out on rates and terms.

The trend seems to be in defiance of all market surmise about big claims outstanding, each perhaps more than sufficient on its own to wipe out total premium income for top-up cover. But insurance markets are well used to defying gravity and long may that continue from the policyholders' point of view.

The Solicitors Indemnity Fund reckons over 250 claims have been notified to it which penetrate its u1 million level of cover and could in theory at least end up in the top-up market. But even if half of these do not materialise, which is quite likely, there still could be substantial calls on the top-up market.

Of course, it is reckoned that as many as half of firms do not have any top-up cover and rely solely on their SIF u1 million protection.

Should the fund decide to increase the level of indemnity available, which is something it has a preliminary look at, it will need to bear in mind that for a good proportion of firms the u1 million level is seen as sufficient and not thrust more on them than they want. So any extra cover might have to be provided as an adjunct to the main scheme. But the SIF is well aware of the issues here.

An element which sadly is only creeping into the top-up picture is that of quality standards and whether these can be reflected in insurance premiums.

Insurers are loathe to yield premium on the promise of something that has not been proved to reduce claims, though commonsense dictates proper quality systems must be beneficial.

We are seeing a number of initiatives attempting to open up this furrow and can only wish them well. The virtuous cycle of better systems, reduced PI claims incidence and shrinking premiums is something achievable and to be achieved.