Law Society unveils professional indemnity insurance buyers’ guide for solicitors
The Law Society has published a dedicated buyers’ guide to professional indemnity insurance (PII) in order to help solicitors navigate the market and make an informed choice when renewing their PII cover.
The guide, ‘PII Made Simple’, is designed to enhance solicitors' understanding of the different relationships within the PII market and to help them establish exactly who they are dealing with in the complex intermediary chain.
The publication of the guide follows a series of warnings to solicitors to check the financial strength of an insurer before purchasing their next PII policy to find out whether the company will be able to meet insurance claims. It follows the financial collapse of two insurers, Quinn and Lemma and the possible insolvency of a third, Balva.
The ‘PII Made Simple’ guidance is the latest product in the Law Society's armoury of measures to help solicitors adapt to the changing market, which will see the removal of the assigned risks pool (ARP) from 1 October.
The Law Society is increasingly concerned about the number of small practices within the 1-4 partner segment who are relying on unrated insurers. At present 12.5 per cent of the PII market (by premium share) is with unrated carriers.
The buyers’ guide is invaluable as it clarifies the routes through which solicitors can deal with the existing entities and sets out how firms may enter into a contract with an insurer via any of these preferences.
Law Society President Lucy Scott-Moncrieff said: "We want to ensure our members make an informed decision this renewal and we're ramping up our suite of guidance and launching a dedicated PII Helpline to ensure they are as well-briefed as possible come August.
"We have lobbied for and welcome the impending market reforms, which are expected to create a more stable and competitive PII market, greater consumer choice and increased scope to ‘shop around’ for affordable quotations from a range of insurers.
"The ‘PII Made Simple’ guide is designed to ensure that if firms are using a broker they know what questions to ask in order to get the best possible service and make a well-informed choice when considering quotations from insurers. With this guidance we are equipping our members with the information they need to be savvy about the process and the market, to be aware of the various options they have. For example, some insurers or underwriting agencies welcome direct access, as opposed to requiring access via a broker."
Lucy Scott-Moncrieff added: "We are continuing to emphasise the message about choosing insurers that are going to be financially secure and able to meet claims in the long term. An official rating from an independent ratings agency is the most objective measure of an insurer’s financial security.
"There is a wider benefit to the profession too. The provision of client protection afforded by the insurance policy enhances its reputation and the entire profession will pay if there is an insurer insolvency event, through increased regulatory costs and compensation fund contributions.”
