Joint venture with Miller will cover 1-4 partner firms and cut out brokers
The Law Society has unveiled a new direct route to professional indemnity insurance cover for small firms.
Chancery Pii, a joint venture between the Society and Miller Insurance Services LLP, will provide PII cover for firms with between one and four partners.
Chancery Pii will provide direct access to insurers with at least A- (Standard & Poor’s) or equivalent financial security rating but not a broker service or any advisory services. It will not accept enquiries from brokers, pay any broker commissions or charge any management fees. Chancery Lane said the absence of broker commission and management fees will create ‘a viable level of profitability for insurers, so encouraging a long-term presence in the market for this segment’.
Chief executive Desmond Hudson said: ‘We have had concerns about instability of the solicitors’ PII market, particularly the 1-4 partner segment, for some time now. Many firms have resorted to using an unrated insurer – often because of lack of obvious choice. A number of rated insurers have withdrawn from this segment and the gap has been filled by unrated insurers, some of whom enter for a few years before withdrawing or, worse, becoming insolvent. This is extremely detrimental to the profession.
‘It was right for us to explore options with the insurance market to increase the availability of choice for our members, particularly smaller firms. Chancery Pii is the result of this. We have created a solution that provides a quick and easy way to access rated insurers, that emphasises security, quality and stability. We continue to advise firms to consider the financial security of insurers in the market.’
Chancery Pii will place insurance with a panel of participating insurers, each with a financial strength rating of at least A- (Standard & Poor’s) or equivalent, that will each take a share of the liability and premium for a policy in an agreed percentage.
The Society stressed that it has made previous attempts to work with brokers on initiatives such as a voluntary code of conduct or standard letter of retainer, or service standards. However, it said ‘little support’ was received from brokers and that there is no industry-wide consensus on appropriate service levels.
There is also growing concern about the level of commission paid to some brokers, which the Society said does not always appear to represent value for money for solicitors. ‘The prevalence of tied arrangements within the 1-4 segment means that many of our members receive an execution-only service and not advice. The advice given by some brokers is of variable quality, with some brokers using a disclaimer to avoid liability when placing solicitor firms with unrated insurers,’ it added.
‘It is difficult for firms within the 1-4 partner segment to cover the entire market via a single entry point. Chancery Pii offers one easy way for solicitors to consider as part of a full market exercise to assess their renewal options.’
For more information see the Law Society website.