The Gazette’s regular updates on the professional indemnity insurance market have been known to tax our journalistic resources in recent times. Leaving aside the SRA’s curious fetish for fixing that which ain’t broke, It can be hard to find something original to say about a market that has remained benign for several years. For well-managed firms, cover has been relatively easy to come by and the carnage wrought by unrated insurers exiting is a receding memory.
But we have a little more to bite on now. The abrupt departure of top-200 insurer Libra, following hard on the heels of Aspen’s withdrawal, supports anecdotal evidence that the market is beginning to harden.
The pair’s timing is not ideal, with just a few weeks to go until the 1 October renewal deadline that is still common to most law firms. Some upward pressure on prices looks inevitable. But this does seem to be a localised problem, stemming from a full-scale review by Lloyd’s of London of how it mutualises risk.
Most brokers stress that there remains plenty of choice out there and we have recently seen new offerings for small and mid-sized firms.
So how should law firms respond? Above all, don’t fall prey to complacency. Insurance markets can turn quickly. Get on with your presentation without further delay if you haven’t done so already. Latecomers are apt to be disappointed.
Meanwhile, I am told that a final decision from the SRA on reform plans to cut minimum cover requirements is expected around the turn of the year. A u-turn by the regulator appears unlikely, despite warnings of a triple-whammy for the profession – premiums will not be significantly reduced, clients will be exposed to new risks and the profession’s reputation will suffer serious damage.
All of this comes on top of Handbook changes enabling ’freelance’ solicitors to obtain ‘adequate’ cover without complying with the SRA’s minimum terms and conditions. The Law Society has this week written to the LSB urging it to block those changes.
Alt least one thing seems certain - clients are going to end up more confused than ever about the redress on offer to them when things go wrong. The personal finance pages of our national newspapers will make hay from their ignorance in coming years.