Property boom fuels indemnity claims

Conveyancing continues to swell the numbers of indemnity claims as year-end figures showed that the number of notifications has jumped as a proportion of the total by 5%.

Figures for 2001-2002 compiled by insurance brokers Alexander Forbes showed that 42% of all professional indemnity notifications last year related to commercial or residential property work.

The figure for 2000-2001 was 37%.

Overall, the figure reflects an increase in commercial property claims from 11% of the total to 16%, with residential notifications remaining the same, at 26% of the total.

Fluctuations in the numbers of claims varied considerably according to the size of firm.

The most extreme change came in the larger firms, where the number of claims for commercial property almost doubled from 10% of the total last year to 19% this year.

But in the smaller sized band surveyed - firms of one to four partners, which account for the majority of the profession - claims in residential property increased to 38% of total notifications from 31% last year.

Solicitors have faced large premium increases this year to add to woes about a more litigious property market.

Tony Blyfield, managing director at Alexander Forbes Professions, said the total market cover in 2001, 175 million, was well below the old Solicitors Indemnity Fund (SIF) figure and that even a 40% hike in premiums this year would lag behind equivalent costs of the SIF today, which he said would have exceeded 300 to 350 million.

Barney Micklem, an indemnity specialist and partner at City firm Reynolds Porter Chamberlain, said: 'It is difficult to make easy deductions from the figures, but often where there has been an increase in activity in the sector that reflects the general financial situation in the country.

It could be that the higher number of commercial property claims reflects the buoyancy of property as a sector despite the general downturn.'

Neil Trayhurn a professional indemnity specialist partner with Southampton firm Bond Pearce, agreed: 'There is some truth in the fact that the property markets seems to remain quite busy across the board.'

Jeremy Fleming