Firms save despite indemnity 'chaos'

Despite what practitioners have described as 'chaos' in making the move to open market insurance, early indications are that many firms have made substantial savings on premiums.

In a snap-shot Gazette survey of five firms in each of the sole practitioner, 2-4, 5-10, 11-26 and 27-80 partner categories, 21 firms saw reduced premiums, two saw increased premiums and two were paying the same.

The 80-partner firms saw less benefit.

Sole practitioners surveyed made the greatest savings overall.

One sole practitioner in Bristol achieved a 71% reduction on his premium, reducing it from 3,500 with the Solicitors Indemnity Fund (SIF) last year, to just under 1,000 on the open market.Three other sole practitioners confirmed that their premiums had reduced by 68%, 53% and 53%.

However, the worst horror story also came in this group - one sole practitioner admitted his premium had risen by 142% from 886 under the SIF to 2,149 on the open market.

In the two to four-partner firm category, savings of up to 50% were seen.

Two firms reduced their premiums from around 60,000 under SIF to 30,000 on the open market.

Two others saw reductions of 48% and 34%.

A partner at one two-partner firm which made no saving on its 18,000 premium said it received a quote for 10,000 from Zurich Insurance 15 minutes after accepting St Paul's quote.

A partner at a three-partner practice echoed the feelings of many when he described the process as 'hideous mayhem' and 'chaos'.

Steve Roberts, chief executive of Zurich Professional, said a large number of firms had missed taking advantage of the competitive market because they waited for quotes from St Paul, which turned out to be higher than expected.

In the five to ten-partner group, savings were slightly lower among the firms surveyed.

Two firms made savings of around 44%, one from 130,00 to 72,000.

Other firms made savings of 23% and 13%.

One firm's premiums remained the same.

A rise of 16% for one firm with an acknowledged poor claims record was the worst news for firms in the 11-26 partner category.

Others made savings of 23%, 37%, 41% and 48%.Savings of around 40% were common in the 26-80 partner category.

One reduced its premium by 57% from 345,000 to 150,000.

Tony Blyfield, managing director of Nelson Hurst - now Alexander Forbes - said the results were as expected.

However, he said the total premium pot had been 'decimated' by some insurers who had quoted 'ludicrous' and 'clearly unsustainable' premiums.He added: 'Where insurers are quoting reductions of 70% or more, you have to question whether they know what they are doing.'

Among the largest firms, savings appear to have been more restrained.

One top 20 firm said it had made a 300,000 saving as part of a total restructuring of its insurance arrangements.Two other large City firms made 'slight' savings.

One said the figures were 'higher than expected'.

Meanwhile, Eastgate this week confirmed that 46 firms had applied to enter the assigned risks pool.

Of the 300 or so forms sent out to firms who were considering applying, the majority appeared to have sorted out insurance arrangements when they were contacted before the deadline, the company added.

Sue Allen