Insurer estimates put the total of professional indemnity insurance premiums paid by solicitors this year at 238 million, an 8% increase on last year, delegates in London heard.

Jonathan Davies, manager of insurer The St Paul's solicitors' business, told a session on insurance that taking the profession's income growth into account, premiums had only risen a couple of percent 'and certainly less than loss trend, or claims inflation'.

He had also estimated that the equivalent amount of cover under the Solicitors Indemnity Fund (SIF) would have cost the profession 343 million.

Mr Davies said solicitors' business 'probably is now' profitable for insurers so long as they selected their risk properly.

However, he claimed that 'too many firms obtain cover when really they shouldn't, or at least they shouldn't without being forced to mend their ways.

It is very difficult for insurers to combat the non-disclosers or misrepresenters who just go from insurer to insurer once they are declined at renewal'.

He argued that not enough of the bad firms are being closed down.

'That's down to insurers writing their business rather than forcing them into the assigned risks pool [for firms that cannot find insurance].'

Mr Davies said The St Paul, the Law Society's joint venture partner, made money in the first year of open market insurance because so many solicitors notified potential claims in the month before SIF cover ended, leading to a lower level of claims over the next year.

However, David Sweeney, UK development director at Hiscox Insurance, said his company made no money in the first year as it got to grips with the market.

He said Hiscox has come across many sole practitioners and small firms handling cases 'which are like me with a biology O-level doing open-heart surgery'.

Mr Sweeney said insurers and solicitors need to work together to minimise claims, and to settle them quicker and cheaper, as some cost more to handle than the actual value of the claim.

Neil Rose