Small firms renewing their professional indemnity insurance (PII) cover will be further squeezed in an already hardening market after insurers Norwich Union and Liberty cut policies for these practices.

Norwich Union, which controls 8.3% of the legal PII market, has stopped offering new cover to firms with nine or fewer partners if they are involved in conveyancing or claims company work. It will, however, offer renewals to existing customers in this group.

Liberty, which controls 1.2% of the market, will only offer new cover to firms with at least three partners and if conveyancing accounts for less than 40% of the firm’s business. It will continue to offer renewals.

Alongside RSA – which stopped offering new cover to one- and two-partner firms in July – and Novae, which pulled out of the market completely in the same month, insurers controlling almost a fifth of the solicitors’ PII market have now cut cover to the smallest firms.

Industry sources believe it is likely that small firms seeking renewals with Norwich Union, RSA and Liberty will also face higher premiums.

However, Clive Sutton, secretary of the PII committee of the Sole Practitioners Group, said there was ‘ample insurance in the market for sole practitioners’.

He noted concern among solicitors over Quinn being removed from the Royal Institution of Chartered Surveyors’ preferred insurers list (see [2008] Gazette, 31 July, 1), but said: ‘They [Quinn] are an appropriate insurer regulated by appropriate financial services legislation. They are producing good premiums and good cover.’

A spokesperson for Norwich Union said: ‘For new business with 10 or more partners, we are looking at each firm on its individual merits.’

Phil Foley, senior vice president at Liberty Mutual Insurance Europe, said: ‘Like many insurers this year, we are re-evaluating and realigning our portfolios.’