Novae, one of the qualifying lawyers’ professional indemnity insurers (PII), is to pull out of the market completely, the Gazette has learned.

According to sources, the insurer, which writes around £2m of PII, will shortly become the second company to withdraw cover from the market ahead of renewals this year.

Last week, insurer RSA said it would no longer provide cover for sole practitioners and two-partner firms – although it will continue to cover larger firms.

Zurich and Travelers, two of the largest insurers, said they are committed to the market.

Simon Lovat, divisional director in the UK professional indemnity division at United Insurance Brokers, told the Gazette: ‘I don’t think we’re in the situation where cover is unavailable. The capacity is there, but the rate charged will go up.’

Andrew Holroyd, outgoing President of the Law Society, said: ‘I do not believe that the market is at the point where firms need to start panicking.’

He added: ‘Despite moves by some ­professional indemnity insurers to withdraw products from the legal services market, there remains a substantial number of insurers offering PII to solicitors. This has ensured the market remains competitive. The Law Society has arrangements in place to ensure that all solicitors have access to insurance. Should difficulties arise in the PII market in future we will review the situation again.’

An RSA spokeswoman told the Gazette: ‘This is a market that has had depressed rates for a number of years… we are absolutely not walking away from the market.’

Novae declined to comment.