Advices on Professional Indemnity Renewal For many the 2019/2020 Professional Indemnity Insurance Renewal season came as something of a shock. The Professional Indemnity Insurance Taskforce of the DSBA sets out some advices on the upcoming renewal process
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otwithstanding that the amount of claims for solicitors had been relatively modest prior to the renewal period, the insurance industry decided to impose upon many members of the profession substantial increases on their premiums.
Background
Since 1994, the obtaining of Professional Indemnity Insurances has been mandatory for all solicitors and even where historically it wasn’t mandatory many firms, if not all, would have maintained some form of Professional Indemnity Insurance. In 1994, of course, the world was a different place in many respects – not least because we had the Solicitors Mutual Defence Fund in the market at that time. While things ended badly for that Fund, nonetheless for many years it operated successfully and helped to keep premiums at a low and sustainable level. The recession which struck us all finished the Mutual Defence Fund and indeed members of the profession had to step in to assist those colleagues who were insured with the Mutual Defence Fund to make sure that they were covered by way of an annual subscription for a number of years to the Law Society to back up the Fund. As we headed into the recession there were still however a good number of insurance companies in the market and indeed many members during the recession availed of the existence of not just rated but unrated 24 the Parchment
insurers in the market who met the criteria such as for example UK General. The unrated insurers left the market subsequently and cannot now return as the Law Society restricted the market to rated insurers. With the ending of the recession we began to see a whittling down over a period of time of the number of insurers who were actually operating in the Irish market and by September of 2019 there were only six insurers in the Irish market.
Current Position It needs to be understood that not all insurers cover all firms. In 2019, of the six insurers in the market, two of them would only cover Partnerships and the remaining four – while they would take sole Practitioners and Partnerships – would be selective in relation to the nature of the work that they would cover. For example, some firms would only insure practices where the property element of their turnover was less than 25% of their overall turnover. What this all means of course is that when we got to September of 2019, the profession was suddenly faced with a relatively small number of insurers in the market many of whom saw fit to increase premiums across the board. The mood music from the Law Society, who are one of the two regulators responsible for dealing with insurance, is not good and while there is talk
