Law Society research has found a growing divide in the PII market with smaller firms and black and minority ethnic (BME) firms finding renewal tougher than the wider profession.
This disparity has led the Law Society to explore urgently the reasons behind the findings, with discussions already underway with a number of key stakeholders.
However, across the board, more solicitors firms are reporting an ease in relation to their professional indemnity insurance (PII) renewals. This follows several measures taken by the Law Society over the past year that aim to assist solicitors in the preparation for renewal, including liaising directly with the insurance market.
According to the Society's PII Survey for 2009-10 Renewal, 79% of firms reported no difficulty in renewing, compared with 74% in 2008-2009.
However, nearly two-thirds of firms stated that their premiums had increased since the previous year, with the median cost of compulsory PII cover increasing by a third, from £12,500 in 2008-2009 to £16,666 in 2009-10.
The survey also found most firms (93%) received an offer from at least one qualifying insurer, with the average response time of insurers for applications received in August and September improving by one week and two weeks respectively since 2008-09.
For the remaining 21% of firms, the experience painted a starkly different picture, with many reporting there was insufficient time to consider quotes due to delays.
The survey found BME firms were notified of a decision by insurers later than the wider profession (56 days compared to 44 for the wider profession). More BME firms (16%), than wider profession firms (6%), were not offered cover by their previous insurer.
More than a third of solicitors firms stated that the renewal dates for PII should be staggered, in line with the Law Society’s lobbying of the Solicitors Regulation Authority to abolish the single renewal date. The Society remains of the view that a single renewal date helps no one, least of all solicitors, and repeats its call for the SRA to heed the views of the profession.
Law Society chief executive Desmond Hudson says:
“We will work continuously to ensure the PII renewal process is less difficult for solicitors, including lobbying for the abolition of a single renewal date. While this alone will not be a magic wand by any means, we think that it would be more advantageous than the current system.”
“This survey has provided some important information which will be extremely useful in gauging what the profession wants and needs in relation to PII. The substantial hike in premiums reported is a concern and will inevitably add to the stress of renewal. Obviously it is good news that fewer firms are reporting difficulty. That said I am under no illusion that for many firms renewal this year will be a worrying time.”
“The Law Society is committed to working closely with the insurance markets, solicitors and the SRA to try to address the root causes of the problems faced by a substantial proportion of the profession when it comes to renewal. We are particularly concerned by indications of different treatment of BME-owned firms. This is an issue where we are taking urgent steps to clarify and resolve the matter”