New indemnity insurers capture market share as solicitors pay less for their cover this year
Collins: sustainable market for the long term
Greater competition for business has led to a small fall in the amount of money solicitors paid for their basic professional indemnity cover this year, figures from the Solicitors Regulation Authority show.
Insurers have underwritten £239m for the compulsory layer in 2012, down from a record-equalling £256m in 2011. All but one of the 23 qualifying insurers secured business, compared to 19 who underwrote solicitors last year, as the market expanded this year.
This led to a wider spread of market share than in 2011, with new players taking over 10% of the market, led by Latvian insurer Balva (6.9%) and Axis Specialty (2.5%). This meant all of the top five recorded lower levels of business than last year.
For the second year running, XL Insurance Ltd had the biggest share with 16.5% of the total premium take, down from 18.3% last year. Travelers Insurance and QBE International moved up jointly into second place with 10.9% (down from 11.6% and 11.8% respectively).
Rounding out the top five were Zurich Insurance (8.9%, down from 9.4%) and Hannover (8.7%, down from 12.5%, which last year placed it second).
This year is the last in which the SRA is operating the assigned risks pool (ARP), and there are now just 20 firms in it, meaning that eight who started October in the pool have managed to find backdated cover.
From next October, the ARP will be replaced with a system where insurers offer a three-month extended policy to firms which cannot obtain insurance for the following year. A firm may continue to practise while attempting to obtain a policy for the first 30 days of this extended indemnity period. For the remaining 60 days, they can only work on existing instructions while attempting to find insurance, or conduct an orderly closure in the case that insurance is not obtained.
Richard Collins, SRA executive director for policy, said: “It was clear that to ensure the long-term sustainability of the PII arrangements one of our biggest challenges would be to address the ARP. Doing this was complex, but we believe the arrangements offer the best way of ensuring client protection through a competitive insurance market.
“The changes ensure firms have PII in place that provides the required level of consumer protection. We have also ensured there is a sustainable market for the long term by creating a competitive and open insurance market. We have implemented this in a phased way over a number of years to ensure a smooth transition and maintain stability.”
Tags: professional indemnity insurance, Solicitors Regulation Authority