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PI rates kept low by new entrants

Published 08/06/2007

Hiscox will continue to shun the solicitors’ professional indemnity market at renewal this October and expects once again to write only £500,000 in premiums.

New players are rumoured to be preparing to enter the solicitors’ PI market, according to a senior underwriter at the insurer, which will ensure it is unprofitable for a second successive year.

The insurer reduced its share of the market from £16m in 2005 to just £500,000 last year and does not expect to write much more than that at this year’s 1 October renewal.

Gary Head, underwriting director of professions at Hiscox said: “Solicitors PI premiums are vastly below the level they should be. There is lots of claims activity around at the moment and some of these could go either way and create a large loss.”

He added: “There are rumours that there will be new entrants this year and a number of existing players may try to increase their participation so I don’t expect we will see an increase in rates this year.”

Commenting on last year’s renewal season he said: “It looks to have been unprofitable. Premiums on primary layers came down and as a result rates softened across the market.”

He warned that many in the market were underestimating the complexity of claims and the lengths of time it takes for them to unravel.

“Underwriters need to accurately assess reserves and incurred but not reported claims. If we were notified of a claim today it could take years to find whether or not the solicitors were negligent and in that time the claim could worsen.”

This article has been reprinted with permission of the Claims Standards Council

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