Professional indemnity premiums could rise by up to 15% this year, the largest provider of solicitors' insurance warned this week.

David Coughlan, head of Zurich Professional, said premium income was not at the right level to cover claims, adding that solicitors overall were still not paying what they did in the last year of the Solicitors Indemnity Fund.


A spokesman for the St Paul, the Law Society's joint venture partner and the second largest provider of insurance to solicitors, agreed there was evidence that the overall sum raised is still not sufficient to cover the cost of claims.


He added: 'This is not necessarily the product of every insurer's pricing and so some insurers may be seeking sharper rises than others.'


Some argue that premium levels have been kept artificially low while underwriters battle to build market share.


Nick Pointon, a director of broker PYV, said increased competition caused by the recent entrance of new underwriters in the market could benefit firms that do not have many claims and are well run. 'They could see premiums go down,' he said.


However, Liz Mullins, executive director of broker Aon Professional Risks, said she expected rates 'to stay pretty flat' overall.


This year has seen the renewal date put back a month to 1 October to avoid problems over the summer holidays. Most predict that there will still be a late rush.


A survey of 150 firms conducted in August for PYV found that 86% of firms had yet to renew their insurance; 28% believed premiums will rise by 20%.


Meanwhile, a Zurich survey of 305 firms has revealed that almost a quarter of firms needlessly risk exposure to negligence actions through shoddy client engagement letters.


It found that 23% do not as a matter of routine identify specifically to whom they owe a duty of care in engagement letters. Some 8% said they do not confirm the authority of those clients for whom they are purporting to act.


Zurich warned that such failures endanger widespread attempts by firms to cap their liability in their engagement letters.



See Editorial