The vast majority of personal injury law firms appear to have renewed their indemnity insurance on acceptable terms despite the instability in the sector, according to a survey of nearly 500 law firms conducted last week.
The Solicitors Regulation Authority revealed last week that 185 firms had failed to secure insurance by the 1 October deadline, but the poll by Liverpool practice O’Connors – which advises other law firms – found that not one of the PI firms surveyed was among them.
The firm said comments like “we started the process in June but only renewed on the very last day” and “there must be a better way than this” reflected the general anxiety and frustrations of many respondents.
Some 87% of those surveyed went with a rated insurer, leaving 13% to unrated insurers. The length of indemnity period varied from 12 months (78%) to 18 months (14%) and 24 months (8%). Those who opted for 18 months appear to be taking advantage of the new rule which allows solicitors to renew at any time of the year.
Changes in premium levels were also mixed. Some 16% said their premiums went up a lot, while 14% saw a significant fall. Most said premiums were broadly in line with last year.
The majority (55%) reported excess levels staying the same as last year, though 11% reported increases in both individual and aggregate levels and 11% reporting decreases.
Four in ten firms took out a management liability policy, similar to directors and officers cover, with 50% choosing not to do so.
O’Connors partner Nigel Wallis said: “Given the increasing COLP and COFA liabilities, the insurance industry would do well to increase awareness of this, particularly amongst the 11% who said they’d never heard of it.”
The service provided by the broker community was considered mixed, with 64% describing it as ‘first class’, 22% as ‘second class’ and 14% as ‘cattle class’.
Four of every five firms said premiums were less that 5% of turnover; the rest paid between 5% and 10%. One solicitor said he was “off to re-train as a plumber”.
Mr Wallis said: “Whilst there are reports of several hundred firms taking advantage of the extended indemnity period, the results of our survey suggest that things are not perhaps as bleak for the majority
“The insurance industry remains nervous of the financial stability of many firms but, on this evidence at least, the industry continues to step up to the plate and support the sector, albeit with some hardening rates and tightening terms.”
London and Slough firm Harris Cartier, which had a significant clinical negligence practice, was sold off last Friday after failing to find the finance to pay its insurance premium.