PROFESSIONAL INDEMNITY: not all insurers meet brokers' market security rules, says Aon


Some insurers offering professional indemnity insurance (PII) quotes to law firms this year do not meet brokers' market security requirements and risk failing to meet liabilities if they go bust, leading insurance broker Aon has warned.



Angus Cameron, executive director for professional risks at Aon, said: 'We have heard that some brokers are issuing quotations with warnings on insurers which do not meet the requirements of the brokers' market security committees.



'If an insurer fails to meet its liabilities, it is the legal firms and their reputations that will suffer along with their clients whose claims are not paid... PII claims often take many years to settle, so it is the insurers' ability to pay in the long run that counts.'



Mr Cameron recommended that firms note brokers' comments on market security and take independent advice where necessary. He called on the Solicitors Regulation Authority (SRA) to ensure there is 'a rigorous regime on insurer market security'.



'I am very surprised that the SRA... [does] not consult with the major professional indemnity brokers on which insurers are approved by their market security teams... Writing large volumes of solicitors' PII business at below market rates could be a disaster waiting to happen,' he added.



An SRA spokesman said its 'role was to regulate solicitors, not insurance companies' and that concerns about individual insurers should be directed to the Financial Services Authority (FSA).



The FSA said it was not aware of concerns over insurer market security. A spokesman said: 'The financial soundness and capital position of general insurance companies is stronger than it used to be following a series of major reforms implemented by the FSA relating to solvency over the last few years.'



He added that under the FSA's Insurance Conduct of Business rules, brokers can provide a quote which, in itself, does not need to be a personal recommendation to take out a particular policy.



See also Covering your back, under Features



Anita Rice