Trevor Moss explains why solicitors are seeing steady insurance rates and improved relations in the professional indemnity market


Solicitors' professional indemnity insurance finally came of age in 2004. The insurance market has exhibited more diversity and imagination in providing cover to law firms, and the profession showed a greater maturity and understanding of the needs of insurers.


That is not to say there is no room for improvement in future years. There was still an all too predictable rush over the last few days, leading to a log-jam of applications on underwriters' desks. Moreover, some firms damaged their credibility by appointing multiple brokers - up to ten in a few cases - in their haste to get the best quote. All this does is waste both insurers' and brokers' time. In many cases, the first broker to see an insurer with a risk will get the quote and others will be turned away, whether they are the best broker to handle the work or not.


The marked difference in 2004, after two years of soaring premiums, was a general levelling-off of insurance rates. Many firms paid still more than they did last year for cover, but this was usually because their practices were thriving with a higher level of fee income than in previous years.

The reasons for improving rates were two-fold. First, there was a general improvement in the global insurance market leading to the first real levelling-off of rates since 11 September 2001. Second, there were several new underwriters entering the solicitors' professional indemnity market, leading to greater insurance capacity and more choice for firms.


On the whole, these new insurers had a different attitude to the solicitors' market than the well-established underwriters, such as St Paul and Zurich, who provide the bedrock on which the market is built. Rather than being prepared to quote on all types of practice, the newcomers were more focused on the best-quality law firms that could demonstrate outstanding claims records and superior risk management procedures. This meant there were some highly competitive quotes available to a select number of firms.


The newcomers were also prepared to consider practice areas that had previously been shunned by the markets. They recognised that just because firms were predominately practising in higher-risk areas, that did not automatically translate into higher claims. The upshot was that some of the new underwriters focused on specific practice areas, and so firms in higher-risk practice areas found up to five insurers prepared to compete for their business, where before only one would quote.


Another marked shift this year was the overall attitude of solicitors to the renewal process. Whereas previously, many had viewed completing their proposal as a necessary evil and a box-ticking exercise, this year the majority understood the advantage of providing detailed information on their practice. The result was that many firms found the renewal process faster and smoother than ever before, with more competition for their business.


As in every renewal period, there will still be a few firms that have failed to secure indemnity cover by the cut-off of 30 September. The message to them is do not panic. There are still insurers who are prepared to consider risks and it is not too late to escape the clutches of the assigned risks pool.


The increasing maturity in the solicitors' indemnity market is to be welcomed, as it is in the interests of both firms and their insurers to have a wide, well resourced and efficiently functioning market.


Trevor Moss is executive director of broker Alexander Forbes Professions