Law Society research into last year’s professional indemnity insurance (PII) renewal process has revealed a growing divide in the market, with ethnic minority firms encountering greater problems than most of the rest of the ­profession.

The Society said it would ‘explore urgently’ the reasons behind the disparity. It has already begun discussions with brokers on the issue.

The Society’s PII survey for the 2009/10 renewal showed that a big majority of firms did not encounter difficulties renewing their insurance, with 74% reporting no problems. However, nearly two-thirds of firms said their premiums had increased on the previous year, with the median cost growing by a third to £16,666.

The research also found that 93% of firms received an offer from at least one qualifying insurer, in an average response time of one week for applications received in August, and two weeks in September.

However, the study showed that ethnic minority firms were more likely to have encountered difficulties in obtaining insurance. These firms were notified of insurers’ decisions later than the rest of the profession, in 56 days rather than 44. Some 16% of ethnic minority firms were not offered cover by their previous insurer, compared with 6% in the rest of the profession. While 84% of the wider profession received an offer from at least one insurer, only 73% of ethnic minority firms did so.

The survey did not show that the cost of PII insurance was higher overall for ethnic minority firms. However, it did find that, of firms that experienced an increase in premium, ethnic minority firms were more likely to see an increase of more than 50%.

Law Society chief executive Desmond Hudson said the Society was ‘working continuously’ to assist solicitors in the next renewal process, and would lobby the Solicitors Regulation Authority to abolish the single renewal date. ‘While this alone will not be a magic wand by any means, we think that it would be more advantageous than the current system,’ he said.

Cordella Bart-Stewart, chairwoman of the Black Solicitors Network, said: ‘There is clear evidence that black and minority ethnic (BME) firms are being profiled on criteria unrelated to their claims history and actuarial risk. Figures show that many of the BME firms in this year's assigned risks pool, particularly those specialising in crime or immigration, are low risk, but no explanation is forthcoming as to the reason for their differential treatment.’

SRA chief executive Antony Townsend said the SRA had already spoken to the Law Society and Association of British Insurers about setting up meetings with insurers and solicitors on the issue.