A number of insurers intend to include a ‘surcharge’ in their professional indemnity insurance (PII) premiums this year, partly to highlight the soaring cost of the assigned risks pool, the Gazette has learned.

It is understood that Travelers, among other insurers, is considering adding the charge to quotes to reflect its exposure to claims made against firms in the ARP.

The ARP is the mutual insurer of last resort for firms that cannot obtain PII from commercial insurers, but insurers have to pay out on claims made against ARP firms in proportion to their market share.

According to Solicitors Regulation Authority figures at 14 June, estimated claims against ARP firms in 2008/09 totalled £41m, with £4.5m of premium due, but just £2m of premium paid.

Gary Horswell, managing director of insurance broker Ntegrity, said that insurers are trying to recoup some losses but also ‘emphasise to the profession – particularly because of the anticipated pain for smaller firms – that the ARP in its current form is something insurers feel is unreasonable.’ Travelers declined to comment.

The Association of British Insurers warned firms that renewals this year will be ‘difficult’. A spokesman said: ‘Given the continuing high volume and value of claims, particularly linked to conveyancing and mortgage fraud, and the huge costs of the assigned risks pool, we expect this to be a difficult renewal. We would advise solicitors to get their proposal forms in early.

‘Longer term, we really need to see positive signs of change to make the market more sustainable and robust, and that means improved regulatory action, and giving insurers more leeway to underwrite according to the individual needs of the customer, rather than the one-size-fits-all policy that is currently imposed upon insurers.’

Last month, PII insurer Hiscox, which had a 1.6% market share in 2009/10, said that it will not offer PII in 2010.