It is a well-known and well-discussed fact that professional indemnity (PI) insurance is a significant operating cost for solicitors. In fact, with an average firm paying upwards of 5% of their annual fees for PI cover, solicitors are paying up to three times more than other professionals, such as accountants.
Current solicitors’ PI cover is not a product of the insurance market, but rather of the Law Society, which governs policy wording through its minimum terms and conditions. Insurers choose whether to offer insurance in this market in accordance with these terms and conditions, while solicitors are required to purchase a minimum of £1m of cover under the Solicitors’ Indemnity Rules. The consumer, solicitors, insurers and the Law Society all benefit from an active, competitive and well-supported market being in place. Each one of these parties has an interest in a healthy market although sometimes these interests can be competing.
