Towards the end of last month, The Law Society published its latest report on the state of the professional indemnity insurance market for medium and small firms of solicitors practising in England and Wales. The report, which is commissioned annually, provides an interesting insight into the workings of this market, as well as an important indication of its current state of health.
Prior to 1 September 2000, solicitors’ professional indemnity insurance cover was provided by the Solicitors Indemnity Fund, which was a mutual fund to which all solicitors contributed. However, since that date, and with the primary aim of reducing policy premiums, professional indemnity insurance cover has been provided on the open market.
Some professions still obtain professional indemnity insurance cover, or E&O (viz. errors and omissions) cover as it is sometimes called, through a mutual scheme. These include barristers, who obtain cover through the Bar Mutual Fund, and architects, many of whom obtain cover through Wren Insurance Association Ltd.
The Law Society’s report is based on a telephone survey of 605 firms, ranging in size from sole practitioners up to 25 partners. The sample of firms contacted was supplied by The Law Society and representative of a total of 9,316 member-firms in this size category. This itself, represents approximately 99% of the total number of firms of solicitors currently operating in England and Wales.
The conducted survey examined a range of issues, including the cost to firms of purchasing professional indemnity insurance, the amount of cover purchased by solicitors and the market share held by the insurers and brokers operating within it.
Some of the key findings of interest are that:
Overall the survey makes for encouraging reading. For the profession, it depicts a mature market that is well supported by an established network of experienced brokers. For consumers, whether they be business entities or private individuals, it suggests that solicitors are taking their insurance obligations seriously and purchasing additional cover where necessary, to protect their clients against financial loss in the unfortunate event that professional negligence should occur.
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