Under cover

Once again the perception of the solicitor's professional indemnity market is that it is softer than in previous years with the potential for some firms to make significant savings on their premiums. In reality this can be found to be true with larger firms benefiting the most. However, for firms with claims, high levels of personal injury work and in particular small firms, sharp increases in premium are commonplace. The cause for these rises can be attributed to the lack of any new insurers entering the market and therefore reduced competition for those risks which underwriters consider as less attractive. However, as with many other types of insurance, different insurance companies often have a preference for different types of law firms, and getting the right match can often reduce premiums.

All brokers working in specific fields form opinions about the insurance companies with which they build relationships. After some years specialising in professional indemnity insurance for law firms, Nick Pointon at fast-growing Lloyd's of London brokerage PYV offers an overview of the many companies which provide insurance to the legal market place with a view to helping firms to find the right insurer match.

AIG Europe

Its underwriting ethos is heavily focused on risk management. AIG also specialises in law firms with more than four partners, which have an income in excess of £500,000 per annum. It looks to build consistency and long-term pricing for its clients. It is actively looking to increase its client base of firms in 2006.

Catlin Insurance Company

Catlin looks to write the majority of its business in the high street end of the market. Its underwriting model is based on firms' fee incomes and work split. It actively writes policies for sole practitioners and firms of up to 10 partners.

Liberty International

Following a very successful entry into the two partner plus market last year, Liberty are looking in 2006 to not only consolidate their existing book of business but also to once again attract a large number of new firms by working with a number of leading partner brokers. They continue with the ethos of building a long term client base.

Navigators Insurance Company

This is the only 100 per cent offshore provider in the legal market. US-based, which has previously specialised in small firms with low premiums. However, this year they are looking to attract larger firms by implementing a minimum premium of £6,750. They do not underwrite any contentious areas of work and look to provide insurance to firms which are mainly dependent on price rather than added-value services.

Norwich Union

Favours firms with between four and 20 partners. Its underwriting criterion is influenced by the number of partners in a firm and how the practice areas of work are split. Norwich Union often prefers long-term, established firms outside London with a proven track record, while tending to shy away from firms specialising in corporate and commercial work.

Novae Underwriting

Having successfully changed its focus in 2005 Novae have captured a significant market share of firms with between two and 15 partners, their underwriting model is based around assessing the businesses fee income and work split. Once again they have restricted its underwriting to a selected number of specialist professional indemnity brokers.

Royal & SunAlliance

This insurer works with a number of selected brokers in London to whom they offer interest-free payment schedules. This year RSA not only continues to write insurance for firms with three or more partners but also has opened an exciting facility which offers competitive terms to one partner firms. Its underwriting ethos is to look at the level of claims versus the level of premium paid over time.

WR Berkley

A new entrant in 2003, again with an underwriting style that looks at firms on their individual merits, this company has a large cross-section of legal clients, and looks to balance its portfolio in relation to the solicitors' market place.

Syndicate 4000

Another new entrant in 2005 they have established themselves as the market leader in assisting distressed firms and continue to offer many a sensible solution in avoiding the Assigned Risk Pool. Outside of this the stock business is writing support lines for larger firms.

Zurich Professional

Zurich continues to have a policy of writing every size of law firm in the market. Their underwriting ethos is based upon a supervision model, with particular attention paid to the ratio of partners to other fee-earning staff. Once again Zurich will be looking more closely at the activities of firms which operate in the personal injury sector, following the number of claims which have occurred from accident management companies in the last 2 years.

Broker deals wisely

As this brief guide attempts to indicate, there are very different kinds of insurers out there, and much time may be expended completing proposal forms and receiving quotes from them. You will be unsurprised to learn that I cling firmly to the view that all law firms, small and large, with claims records or without, with commercial practices or predominantly private client practices, would be well advised to seek the guidance of a broker who has a track record in the legal indemnity insurance market to lead them through the professional indemnity insurance maze.

Nick Pointon Director PYV Ltd