Solicitors reaped the benefits of a cut-throat insurance market this year as they spent 14% less overall on professional indemnity premiums, according to figures released this week.

The total insurance pot for 2006 was estimated at £211.3 million, down from £244.8 million in 2005.


The latest Law Society figures also show a drop in market share for many of the larger players, with new entrants establishing a foothold in the market and driving down prices.


Zurich Professional remained the largest insurer of solicitors, but its market share dipped slightly to 21%. QBE International Insurance maintained its 16% share and second place, while St Paul Travelers Insurance Company dropped 2% to 13%, but stayed in third place.


Andrew Darby, head of the Law Society's professional indemnity section, said solicitors have benefited from a 'thriving market' with a lot of competition.


Steve Holland, divisional director of broker Alexander Forbes Professions, added: 'These figures probably mask an even greater reduction in premium, because firms will have had higher fees, and so insurers will have reduced their rates even more than the 14%.'


He said new entrants such as Quinn Direct and the International Insurance Company of Hannover will have had a greater influence than their small market shares (0.4% and 0.1% respectively) suggest as 'existing insurers will have responded to try to keep their clients'.


Mr Holland said that rates were unlikely to go up next year, but warned: 'It is difficult to say how long these soft rates can last. Soft/hard market cycles seem to be more frequent, and I would not be surprised to see the return of a hard market within the next few years. We could be seeing 50% increases in prices. Solicitors should enjoy it while it lasts.'


Only 17 firms have applied to join the assigned risks pool because they were unable to obtain insurance, the figures also revealed - a similar number to previous years.