Cover: cost of insurance went up sharply this year
Solicitors paid £256m for the compulsory layer of professional indemnity insurance – the highest amount since the first year of buying insurance on the open market – Solicitors Regulation Authority (SRA) figures have shown.
There are also now just 32 law firms in the assigned risks pool (ARP).
Though on the face of it £256m appears to be a 20% increase on last year’s £214m, SRA investigations have indicated that in 2010 a number of insurers adopted strategies to reduce their declared premiums for the compulsory layer.
This is because insurers have to cover the cost of the ARP in proportion to their share of compulsory layer.
Solicitors paid £256m in 1999, the first year after abandoning the Solicitors Indemnity Fund; the highest since then was £246m in 2009, although it has been as low as £154m in 2000.
Chartis, which has been the market leader for some years, saw its share halve, from 18.1% to 8.9%, after it decided not to write any new business this year.
XL Insurance now has the biggest share to the market – 18.3%, up from 13.3% last year – followed by Hannover (12.5%, down from 14.4%). Rounding out the top five are QBE (11.8%, up from 8.2%), Travelers (11.6%, up from 11%) and Zurich (9.4%, down from 12.9%).
Other significant players, such as Allianz and Aviva, saw their market shares reduced, while Lemma – which was the ninth biggest provider last year with 2.9% – was the only one of the 20 qualifying insurers to write no business at all.
The ARP figures for this year indicate that 21 firms which were originally in the pool have been able to find insurance in the first month of the new indemnity year – the rules give firms an extra month to secure cover and backdate it to 1 October. This time last year there were 337 firms in the ARP, the rules for which have been significantly tightened this year.
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