An insurance intermediary in the City of London has opened the door to the new breed of freelance solicitors by launching the first indemnity cover for them.
The lack of appetite among insurers for covering freelance solicitors was flagged well in advance of their creation in last November’s Standards and Regulations (STaRs). and we reported last month that a network for freelancers could not get off the ground because of this problem – leaving the concept an aspiration rather than a reality.
But Inperio has now stepped in. Chief executive Simon Lovat told Legal Futures that the amount of cover would range from £500,000 to £2m and premiums would start at £2,000.
He said it was up to freelance solicitors to understand what the requirement to have “adequate and appropriate” indemnity insurance meant for their businesses.
Mr Lovat went on: “We will not be drawn on what is ‘adequate and appropriate’. What we are doing is providing a range of products. If in doubt, a solicitor could revert to the minimum cover level of £2m for regulated firms.”
He said Inperio aimed to provide a “broad brush cover” which would be suitable for the majority of freelance solicitors.
The amount of cover depended on the kind of work, but the minimum premium would be £2,000 per annum, rising to £4,000 for more risky work like conveyancing.
Mr Lovat said the only kind of freelance solicitor Inperio was unlikely to cover were former partners of large commercial law firms.
“They may never have a claim, but if they did it could be so large that the amount of any premiums they had paid would be inconsequential.”
Mr Lovat said around half of the 50 or solicitors he had been in contact with so far had been longstanding partners in large commercial firms who wanted to go on working as a freelance solicitor with two or three corporate clients.
“That kind of cover is not right for us,” Mr Lovat said. “Commercial work like that is in large corporate law firms for a reason.”
He said Inperio’s cover was aimed at high street solicitors who wanted to offer freelance legal services in areas such as immigration, family law, crime and conveyancing.
“With high street work there are risks, but they are more manageable. There are more claims than in commercial work, but they are smaller and at a frequency which we can model.
“We are more interested in frequency than severity. We can price for that.”
Mr Lovat said conveyancing was the highest risk area in terms of claims, but Inperio had good data on it. However, he had not spoken to any specialist conveyancers so far who wanted to go freelance, perhaps because they would lose the ability to have a client account.
Instead, he said he had been in touch with solicitors specialising in lease extensions, as part of their work with estate agents, and duty solicitors wanting to provide criminal defence services.
Mr Lovat said Inperio had been a qualifying indemnity insurer providing law firms with cover since 2014 and had a market share of around 5%.
Inperio, based at Canada Water in London, is a managing general agent, providing the cover with underwriter Accredited Insurance (Europe) Limited, owned by insurance group Randall & Quilter, based in Bermuda.
Mr Lovat added: “Many insurers have not appreciated the opportunity here. If you don’t know what the market is going to look like, it’s easier to sit on your hands.
“We have the data sets and pedigree to provide a solution.”
Iain Lock, the high street solicitor who has spent the past year planning the Solo Legal Network for freelance solicitors, described the announcement from Inperio as a “boost” to his efforts, which could “trigger other indemnity insurers to look at the market more seriously and follow suit”.
Mr Lock said he was still concerned by the need for freelance solicitors to obtain “adequate and appropriate” insurance.
“The risk is that the question of what is ‘adequate and appropriate’ will ultimately be decided by a judge.
“The concern is that it is up to the freelance solicitor to make a decision about this, while law firms are protected by the SRA’s minimum terms and conditions.
“We would like to develop a stronger kind of insurance product that took this risk away.”