Hundreds of law firms have yet to secure professional indemnity insurance and from this week are practising uninsured, it has been claimed.

A spokesman for The St Paul, the Law Society's joint venture partner, said: 'Solicitors appear to have left it later this year.

There are hundreds of firms yet to obtain cover.'

Under the indemnity rules, insurers are allowed to backdate insurance for up to a month.

If firms fail to secure insurance by the end of September, they will be placed in the punitive assigned risks pool.

David Coughlan, head of Zurich Professional, said 'there are still firms in the market that haven't placed their insurance'.

Liz Mullins, executive director of broker Aon Professional Risks, said there were 'some stragglers' - but not hundreds.

Views differ on the level of premium rises this year.

Ms Mullins said they were 10-15% for the compulsory 1 million of cover, compared to 36% last year, putting the premium pot across the profession at around 250 million.

She said there has been single-digit growth for top-up cover, which rose sharply in 2002.

She said: 'Premiums have reached a level that makes for greater sustainability and, if the economic and claims climates remain stable, the outlook for 2004 is relatively bright, with premiums being affected primarily by fee growth only.'

But Mr Coughlan estimated that increases in both markets were up to 35%.

Nick Pointon, group development director at broker PYV, said the market had been softer, especially recently, so rises were more modest than last year.

'Lawyers have done very well this year,' he said.

'The big winners were medium-sized firms that didn't have any claims, and also firms which took on risk management because insurers could see they were a better risk going forward.'

Ms Mullins said larger firms had an increased appetite for bigger excesses, but that they were still only talking about setting up captive insurance companies offshore, rather than actually doing it.

She added: 'The issue for the next three years and beyond will be the extent to which claims experience begins to outrun the premium income received.

If this happens, whatever the external factors, pricing will be affected.'

By Neil Rose