Chartis delivers professional indemnity insurance blow

The UK’s largest professional indemnity insurer does not have an ‘appetite’ to take on new law firms with fewer than 10 partners, it told the Gazette this week.

Chartis, previously AIG, which had a 15% share of the solicitors’ professional indemnity insurance (PII) market last year, said that its ‘new business focus’, for new rather than existing clients, will be on firms with 10 or more partners.

A spokesman said: ‘We have informed brokers that we do not have an appetite to insure solicitor firms with fewer than 10 partners.’

The news will come as a disappointment to more than 3,000 small law firms and sole practitioners likely to need to find a new insurer this renewal, because of Quinn’s expected exit from the market, and Hiscox’s announced departure. Zurich, the third largest PII insurer with a 13% market share last year, said in July that it will ‘significantly’ cut the number of new law firms it takes on.

The Chartis spokesman added: ‘It has been a difficult year for the solicitors’ [PII] market in terms of claims and the future of the [assigned risks pool]. There have been predictions that the number of firms in the ARP could easily double this year, which clearly affects how underwriters view the market. Premiums will rise in part to cover the probable increase in claims arising from the ARP.’

Travelers, the second largest PII insurer with a market share just over 13% last year, has so far declined to comment on its plans for the coming renewal period.

Meanwhile, brokers reported that insurers are set to ask solicitors for increasingly detailed information before offering PII quotes.

Brian Balkin, executive director at insurance brokers Lockton, said: ‘We have had a number of insurers asking for additional financial information from firms, such as profit or loss before tax, and partner drawings over past financial years. Some insurers have actually asked us to add these questions to our proposal form. It’s not purely an aid for underwriting solicitors’ professional indemnity, but more of an underwriting aid for insurers looking at the overall health of the law firm in the current economic climate.’

Janine Parker, head of solicitors’ professional indemnity at Marsh, said that some insurers are also asking for partners’ CVs.