Report comment

As usual with most problems there is not a single solution to the problem.

Insurers set premiums at a level so that they can make a profit over the longer term. That level of profit is measured in single figures percent.

The reason they keep increasing premium is because solicitors keep having claims or at least insurers are being hit for claims. Whether that is because the minimum terms are too onerous or because a number of solicitors are causing chaos is open to debate, but its probably a combination of the two.

Small firms have large claims. That's a fact and whilst the larger firms do get involved in bigger work, they are able to afford risk managers, quality systems etc to minimise the risk. However, they still do have claims too.

Many of the unrated insurers that have failed in this market have been a front. Its always the same people/financiers behind them who want to make a fast buck. They come into the market and charge low premiums. That seduces firms and they pay. Before claims really hit, the insurers fold in on themselves and wind up. They then have no run-off liability and throw it back on to the retired solicitors or their previous insurer.

Insurance is about the many paying for the few. The problem is the few have big claims and lots of them.

As consumers of a service ask what your broker charges. Find out who is earning what. In many cases there are 2/3 brokers in the chain earning effectively up to half your premium in commission....and just to put a tin hat on it, you pay 6% tax for the privilege. Get the broker to charge a fee and ask to see the Net premiums insurers charge. Its your right to do so.

Meet your broker. In fact meet a couple of brokers. Interview them. Find out what you are getting for your money. Do they have a claims department that can help you when you are in need of it? If not what are you paying for? Just pay a flat broking fee if you expect to do all the claims legwork yourself.

Do your homework properly.