Insurers are breaching Financial Services Authority (FSA) rules by telling law firms to accept professional indemnity insurance (PII) quotes within seven days, the Law Society has said.

Chancery Lane said that one PII insurer, acting through its broker, has imposed such a requirement, which breaches FSA rules requiring insurers to ‘take reasonable steps to ensure a customer is given appropriate information about a policy in good time and in a comprehensible form, so that the customer can make an informed decision about the arrangements proposed’. The Society said it is investigating claims that other insurers have adopted similar practices.

Law Society chief executive Desmond Hudson has written to the insurer and broker concerned, advising them of the possible rule breach and urging them to amend the terms of quotations already issued. He also asked for solicitors who accepted insurance offered with the seven-day requirement to have extra time to withdraw from the insurance; and that future quotations should provide for a longer timeframe for acceptance.

In the letter, Hudson said: ‘Seven days does not appear to us to be sufficient time for our members to consider the complex insurance documentation involved, and to take a view on the competitiveness of the quote. On this last point, it is significant that the legal PII market comprises only a small number of firms that are willing to write the smaller end of the solicitors profession, most of which have not yet had an opportunity to quote.’

The concerns arose following calls to the Law Society PII helpline, which opened on Monday. Solicitors can contact the helpline on 020 7320 9545 or email PII@lawsociety.org.uk.

In a further development the Law Society has endorsed a PII payment scheme from EB Commercial Finance EB Commercial Finance that allows solicitors to spread the cost of premium payments over 12 months. The scheme requires basic details, including firm accounts and details of equity partners. Upon collection of the first payment, funds will be released directly to the practice. Applications can be submitted through EB Commercial Finance’s website until 27 October.

Meanwhile, Irish insurer Quinn has confirmed as expected that it will not re-enter the solicitors PII market in England and Wales this year, after a Gazette report revealed that insurer Travelers is expected take on up to three-quarters of sole practitioners previously insured by Quinn.