Monopoly fear

After printing some letters which critically contrasted premiums quoted by St Paul with those quoted by other insurers in the professional indemnity market, you published a response by St Paul's general manager (see [2000] Gazette 17 August, 19).

Reassuringly, he began by telling your readers that the Law Society had achieved its objective of creating 'a truly open market allowing the profession to choose from a number of providers'.

Five paragraphs later, however, St Paul's representative was expressing confidence that, in the long term, his company would become 'the only reasonable choice for solicitors' professional indemnity'.

Is the Law Society aware that its nominated insurers appear to be seeking to undermine the Society's own 'avowed intent', and to establish a monopoly in the market? If so, what was the point of dismantling the Solicitors' Indemnity Fund? If not, maybe the president of the Law Society ought to hold an urgent meeting with the general manager of St Paul so that the two of them can decide whose vision of the future is to prevail.

Ian M Torrance, Bernard Oberman & Co, London

The Law Society President replies:

The new indemnity insurance arrangements which came into effect last week implement the wish of the profession, as expressed in the ballot following a special general meeting, to have a choice of insurer for professional cover, rather than a mandatory scheme operated through the Solicitors' Indemnity Fund.

As part of those new arrangements, the Law Society entered into a joint venture with one insurer, St Paul International.

The purpose of that was primarily to ensure that the profession is protected against any future hardening of the insurance market.

St Paul has undertaken, as part of the agreement, to offer cover to all sectors of the profession - although St Paul of course remains free to reject firms whose individual circumstances makes them uninsurable.

No other insurer has made that same commitment.

Without an agreement of this sort there was a risk that when the market hardens, some sectors - such as sole practitioners - might find it difficult to obtain cover at all.

But the Society has not treated St Paul as its recommended insurer, above the qualifying insurers.

The advice the Society gave was that firms should shop around and find out what terms were available in the market.

Different firms will inevitably have different experiences with indemnity insurance in the commercial market.

In the long run, this will reflect their individual claims records and risk profile.

I am pleased that the Law Society was able to implement the wish of the profession for change so rapidly, whilst maintaining the unparalleled level of public protection provided by our indemnity arrangements.

Michael Napier