Professional indemnity insurance boost for sole practitioners
Travelers, the second-largest professional indemnity insurer, has struck an exclusive agreement with Quinn’s former broker, Prime Professions, to offer cover to sole practitioners left in limbo by Quinn’s expected departure from the market. Quinn presently insures around 1,900 sole practitioners and about 1,000 small firms.
The development will be welcomed by the smallest firms as they seek cover in the toughest renewals round yet. However, Prime director Richard Brown stressed that Travelers will only take on around three-quarters of the 1,900 sole practitioners currently insured by Quinn, and will charge them premiums 15-20% more than it charged sole practitioners last year. Market sources suggested that Travelers may take on fewer practitioners than indicated by Brown. Travelers declined to comment.
Around 500 sole practitioners currently insured by Quinn are therefore likely to face the extremely difficult task of finding alternative cover. Elsewhere in the market, the Gazette understands that insurer RSA, which had a 6% share of the PII market last year, will cut a significant number of its existing customers, and will not take on any new firms this year. RSA declined to comment on its renewal policy, but said in a statement: ‘RSA has decided to continue to insure solicitors in England and Wales in 2010. Only existing clients will be considered for primary (compulsory limit) covers. This means that no new business will be written for these primary covers.’
RSA also noted ‘significant concerns’ regarding the assigned risks pool, and said that it wants to work with the Solicitors Regulation Authority to address these.
There was more encouraging news from insurer Lemma Europe, a branch of Ukrainian insurer Lemma Insurance. It is to increase its PII capacity by up to five times, from £4m capacity last year, to £20m this year, according to Nick Rowe, business production and development manager at broker Monitor Insurance Services, which brokers for Lemma. Lemma typically insures one- to five-partner firms, Rowe said.
Earlier this month, Chartis, the UK’s largest PII insurer with a 15% market share last year, said that it does ‘not have an appetite’ to take on new law firms with fewer than 10 partners this year, although it is not reducing its existing client base. Zurich, the third-largest PII insurer with a 13% market share last year, said in July that it will significantly’ cut the amount of new PII business it underwrites for law firms this year.
Last month a new entrant, Vision Underwriting, entered the market after striking a deal with the Law Society.
In a further development, the Law Society this week opened its PII helpline for solicitors. Email PII@lawsociety.org.uk or call 020 7320 9545.
Comments
75% conversion by Travelers as suggested by Prime is unrealistic
As a broker I'd be stunned if those that were with Quinn would choose to afford a Travelers price and so the 75% conversion rate is woefully optimistic of Prime. Travelers are very consistent with pricing so if you had quotes from them before they are only going to at that level or higher in 2010.
Lemma might be cheap but look where that (Quinn) left the profession, and in-turn could have damaged the public.
There has to be a consensus to reform the PI market and that can only be achieved when the damage of the ARP and such wide minimum terms are revised to sit in closer alignment with other professions such as the ICAEW. This has to happen and the sooner the better.
Annual Pain
These articles in no way reflect the real pain sole practitioners and small firms go through anually to try to secure insurance.
Hours and hours will be spend preparing proposal forms (all slighty different) wth supporting paperwork. Do you submit them all (brokers say not to but they would wouldn't they) or only some?
Do you submit early (as the Law Society advises) as you still won't hear anything, no matter how many calls you make.
If you subnmit some and keep the others in reserve and no realistic terms come through what about that 'Have you been refused insurance ' question. If you wait you run the risk that someone will not give you terms and you have to answer 'Yes' on later forms.
Why does the firm who insured you last year not want you this year, or only at a hugley increased premium, although nothing has changed?
How do you run the firm and keep the clients happy and make sure this stress does not generate claims itself as your nerves are ragged and you can't sleep with worry? You may have to close the firm and make every one redundant in a few days after all.
Do I miss this annual exercise in gratuitous emotional violence? No.
Spin Spin & more Spin in the most difficult renewal season ever.
Pure spin.
I doubt if many of Quinn's insured will find Travellers premiums competitive compared to what they paid to Quinn - & this years market is going to be tough anyway.
The ARP is going to be very busy.
Why aren't the Law Society/SRA giving more proactive advice on the orderly closure of practices for those who want to call it a day ?
Because the Law Society/SRA
Because the Law Society/SRA don't care about anything other than their own pay and status-certainly not the legal profession. The system is totally and utterly corrupt.
I thought that I would carry
I thought that I would carry on one more year but then received on a Monday morning in the same post in late July two letters one from Santander and the other from Lloyds taking me off their panel as of immediate effect. In one day I was effectively barred from 30% or more of the lending market. I have appealed to Lloyds Bank and they will not reinstate me. Their excuse is a change of criteria. I have not been negligent, incompetent, dilatory nor am I aware of any of my clients complaining. They have not requested any of my files to review.
Then for my indemnity insurance proposal i have to state whether or not I have been removed from any panels and also provide a business plan and cash forecast. How can you forecast for next year when you have just been removed by two large lenders and the Natiowide B/S may do likewise.
I am currently with Quinn and my run-off is £9000.00. To insure in October with Travelers, it looks as if my annual premium will be around the £18-20k mark. The run off with Travelers is 3 times premium so if I am in this same or worse situation next year and HAVE to close my run off will be £60,000.00.
Quite frankly there is no point wasting time over it. I am getting out and will use my skills earning a living doing something else. I will probably come off the Roll as you are then a free agent to do what you want and without fear of having your knucles rapped for some minor compliance breach.
I believe small firms are doomed as the Lenders have a culture of being large institutions wanting to do business with other large institutions. Small firms are like small traders. The Banks do not like lending to small businesses as they are too transient and I beleive small one, two or three partner solicitor firms are in treated the same.
My children are studying accountancy instead!
Travelers are not sole practitioners saviours
Horrified is the only word to describe my reaction on being told by Prime that Travelers would offer me insurance this year for a premium of £40,000.00 - that is compared to the £10,000.00 I paid Quinn last year. Apparently according to the girl at Prime I spoke to, "I was lucky" as they had refused some people and I should snap up the offer within the 2 week deadline.
I have not accepted the advice of Prime and having gone elsewhere have been offered a much more reasonable premium of £14,000.00. Sole Practitioners should be wary of such hard sell tactics fed by the doom and gloom air of panel culling and ABS. Perhaps the Gazette should consider whether an insurer who preys on small firms in their hour of need is not a saviour but a shark.
panels.....
Of course,
if our lords and masters at the SRA were to change the rules so lender and borrower had to be represented separately that would be at least of some help to most high street firms.
The lenders could give all their work to a handful of firms that they keep under their finger.
The clients can continue to use a local lawyer that will properly look after their needs.
perhaps the Law Society could get of its arse and start "lobbying" on this point. I here they do marvellous work for everyone except those who pay for their existence.
I bet indemnity insurance would drop by at least 10 per cent if this were to happen - maybe more.
not going to hold my breath on this one... just like anything else that could actually help us....