Solicitors' minimum indemnity cover should rise to 2 million, warns AON

INSURERS: as personal injury claims breach 1 million, average premiums increase by 30%

The minimum layer of cover of solicitors indemnity may need to double to 2 million next year to face the threat of bigger claims, according to the head of one of the biggest brokers.

Elizabeth Mullins, practice leader for solicitors at Aon Professional Risks and former managing director of the Solicitors Indemnity Fund, said debate is currently rife in the industry that the doubling will be necessary.

She said: 'Personal injury claims are the benchmark for the lower limit of solicitors' indemnity.

To some extent these have already left the 1 million limit behind; many claims are breaching the 1 million limit.'

Ms Mullins said that last year only 14% of sole practitioner firms insured themselves beyond the compulsory level, with around 60% of firms in the two-to-ten partner firm band doing so.

She said: 'Our expectation is that there will be even fewer firms doing so this year.'

She said around 15% of smaller firms have also increased the excess that they must pay in the event that they incur a claim in order to keep the prices of their policies down.

Ms Mullins also called for the Law Society to introduce more than one renewal date per year.

She said: 'It would mean less of the "take it or leave it" mentality, which must be in the profession's interest.'

She said that AON had seen average premium rises of 30% on the first 1 million of cover but that this covered a broad spread with firms paying from 10% to 100% extra.

Prices on cover exceeding the compulsory layer had risen between 250%-300%, according to AON.

Peter Farthing, chairman of the Law Society's indemnity insurance committee, said: 'The 1 million minimum level has been exhaustively reviewed by the committee.

There was no necessity to raise it because most firms either have valid claims under 1 million or adequate further cover.

There are few instances of valid claims exceeding 1 million.'

Jeremy Fleming