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Biba in PI spat with Law Society
Tuesday, October 01, 2013 8:32 PM

Legal professional body brushes off criticism over its scathing broker comments

The solicitors’ professional indemnity (PI) market has been subject to more attention than usual over the past few months, and September was no different. The Law Society announced that it was pairing with Miller Insurance Services to create Chancery PII, which will provide cover for law firms of one to four partners.

And contained within the announcement were some strong comments on solicitors’ experiences at the hands of insurance brokers, as well as a firm resolution that no brokers would be involved in the buying process when dealing with the new managing general agent.

The Law Society stated that, although it had attempted to engage with the insurance industry to help improve standards “little support was received from brokers and industry-wide consensus on appropriate service levels hasn’t been achieved”.

“Ill-informed”

The British Insurance Brokers’ Association (Biba) hit back at the comments, describing them as “ill-informed” and “self-promoting”.

Miller declined to comment on the spat. However, Elliott Vigar, head of regulation at the Law Society, stood firmly by what had been said.

Taking on what he termed Biba’s rebuttal, Vigar pointed out that the trade body does not represent all insurance brokers.

Furthermore, he said: “There are clearly brokers who provide value for money – but that’s not to say all brokers, de facto, are that good.

“The fact remains that some of our members’ experiences have been pretty dire.”

Questioning fees

Vigar called into question how brokers could justify bringing in a 20% commission fee for “providing what is effectively an-execution only service”.

He also highlighted how law firms at the smaller end of the market in particular were suffering.

“They have been targeted by unrated insurers and the brokers who work with them,” explained Vigar.

Berliner became the latest in a string of unrated insurers to abruptly leave the solicitors’ PI market last month, following Balva in June 2013 and Lemma in September 2012, resulting in many law firms scrambling to find cover with the renewals closing date fast approaching.

As one source put it: “Three unrated insurers have ceased trading in two years, it speaks
for itself – why are people still using them?”

Vigar stressed that this was yet another example of why Chancery PII was necessary: “It is completely inappropriate to be advising solicitors to take up insurance with insurers whose financial position is clearly questionable.”