The average premium for professional indemnity insurance (PII) has risen by 56 per cent in the last 12 months, a survey of solicitors’ firms has found.
The survey, carried out on behalf of the Law Society by market research firm Behaviour and Attitudes, showed average total premiums for firms rising from €24,695 in 2009 to €38,416 last year.
Firms with a poor claims history were paying three times as much as those with fewer claims, with increases averaging 132 per cent.
Overall, one in five firms admitted making a PII claim over the past five years but, while 90 per cent of such firms had implemented risk-management procedures, this did not necessarily result in reduced premiums.
In total,770 firms responded to the survey, which found that two thirds of the PII market was now served by just two insurance firms, XL Insurance and the Solicitors Mutual Defence Fund (SMDF), following the departure of RSA and Quinn from the market over the past 12 months. SMDF is now insolvent and will not be writing any new business for this year’s renewal date on December 1.
Last year, 43 per cent of firms changed their insurer. More than two thirds of firms were notified of their 2011 premium less than 12 days before the renewal date.
‘‘The consequent shortage of time given to firms to consider quotes is a key factor causing them difficulty in renewing their PII," said the survey.
Law Society director general Ken Murphy said the survey was ‘‘objective evidence of the extraordinary increases in cost, stress and uncertainty in the annual professional indemnity insurance renewal’’.
‘‘The survey lays bare the lack of competition resulting from the withdrawal of so many insurers from this market.
It shows why an ever-increasing number of solicitors is questioning whether the current system is sustainable," he said. ‘‘Insurance costs are spiralling upwards, while fee income is plummeting. Solicitors feel as if they are standing with one foot in each of two boats that are steadily moving apart."
This will be unsustainable for many firms.