Insurers are beginning to challenge solicitors over the terms of their professional indemnity insurance (PII) policies amid early signs that the profession is facing a wave of negligence claims.

Some 82% of major insurers predict that the number of claims on solicitors’ PII policies this year will be higher than the 2008/09 indemnity period, according to a survey of 11 insurers by insurance broker Ntegrity Insurance Solutions. Just under two-thirds predicted that the total value of these claims will increase compared with 2009.

Frank Maher, partner at Liverpool risk management and professional indemnity firm Legal Risk, said that PII insurers faced with a surge in claims are beginning to dispute the terms and conditions of PII policies. He said that insurers have recently started trying to deny cover by establishing that a sham partnership exists.

Maher also said that several large firms are experiencing significant increases in claims, some being driven by the economic climate.

None of the insurers polled by Ntegrity expected PII premiums to fall during the 2010 renewals season, with 85% forecasting premium rises. In the indemnity year 2009/10, the cost of insuring the profession was £241m – a £15m rise on 2008/09.

Gary Horswell, managing director of Ntegrity, said: ‘This picture will be a worry to solicitors already being tested by the business climate. If it transpires that claims volumes and costs increase in the way anticipated, it will have a fairly immediate impact on premiums as insurers are no longer able to rely on historic levels of investment income to balance the books. Claims will have to be covered by premiums.’

Some 18% of insurers polled by Ntegrity expected that the number of claims on solicitors’ PII policies will increase substantially, while 64% predicted a small increase in claims.