Professional indemnity insurance is an expensive headache for solicitors.
As those attending the Gazette’s roundtable noted, it is set at such a level as to be in competition for funds that firms would prefer to dedicate to staff or a marketing budget. Comparable professions pay less for insurance, enjoy greater choice and survey an underwriting field largely absent of unrated insurers.
To many, the PII market feels dysfunctional.
Badly run firms can ‘wash in on the tide’ and the withdrawal of insurers like Balva from the market was disorderly.
This is the context in which the SRA is considering two aspects of PII. First, whether only rated insurers should be allowed to write cover for solicitors. Second, whether the ‘qualifying terms’ should be changed.
The second point surely deserves the greatest attention. The terms are not relevant to the business of many firms, and are so prescriptive and widely drawn that they deter insurers from offering cover to this market. They also seem to support a position whereby solicitors accept broad liability for conveyancing transactions – a position that suits lenders very nicely.
Reform of the status quo – where insurers of questionable soundness are signed up to providing cover that reads as close to ‘bulletproof’ – has been kicked into the long grass before. This time round that would be a mistake.