New PII option for small firms unveiled
30 Aug, 2013
The Law Society has today unveiled a new direct route to professional indemnity insurance cover for small solicitor firms.
Chancery Pii, a joint venture between the Society and Miller Insurance Services LLP, will provide PII cover for firms with between one and four partners.
Chancery Pii provides direct access to insurers with at least A- (Standard & Poor’s) or equivalent financial security rating but does not provide a broker service or any advisory services. It does not accept enquiries from brokers, pay any broker commissions or charge any management fees. The absence of broker commission and management fees will create a viable level of profitability for insurers, so encouraging a long term presence in the market for this segment.
Commenting on the market reality for smaller firms Law Society Chief Executive Desmond Hudson (pictured) said: “We have had concerns about instability of the solicitors’ PII market, particularly the 1-4 partner segment, for some time now. Many firms have resorted to using an unrated insurer – often because of lack of obvious choice. A number of rated insurers have withdrawn from this segment and the gap has been filled by unrated insurers, some of whom enter for a few years before withdrawing or, worse, becoming insolvent. This is extremely detrimental to the profession.
“It was right for us to explore options with the insurance market to increase the availability of choice for our members, particularly smaller firms. Chancery Pii is the result of this. We have created a solution that provides a quick and easy way to access rated insurers, that emphasises security, quality and stability. We continue to advise firms to consider the financial security of insurers in the market.”
Chancery Pii will place insurance with a panel of participating insurers, each with a financial strength rating of at least A- (Standard & Poor’s) or equivalent, that will each take a share of the liability and premium for a policy in an agreed percentage.
Why choose a direct approach that does not use a broker?
The Law Society has made previous attempts to work with brokers to develop initiatives that would assist our members, for example, a voluntary code of conduct or standard letter of retainer or service standards. However, little support was received from brokers and industry-wide consensus on appropriate service levels hasn’t been achieved.
The Law Society is increasingly concerned about the level of commission paid to some brokers. The scale of the commission payments does not always appear to represent value for money for solicitors. The prevalence of tied arrangements within the 1-4 segment means that many of our members receive an execution only service and not advice. The advice given by some brokers is of variable quality, with some brokers using a disclaimer to avoid liability when placing solicitor firms with unrated insurers.
It is difficult for firms within the 1-4 partner segment to cover the entire market via a single entry point. Chancery Pii offers one easy way for solicitors to consider as part of a full market exercise to assess their renewal options. For general information about how to do this, see the, “Law Society’s PII Made Simple” on our PII web page.
More about Chancery Pii:
Chancery Pii is a trading name of Six Clerks Insurance Services Limited, which is an Appointed Representative of Miller Insurance Services LLP.
Six Clerks Insurance Services Limited is a joint venture between Miller Insurance Services LLP (Miller) and the Law Society.
The Law Society has endorsed Chancery Pii and its products. Such promotion and endorsement is considered to be a regulated financial services activity and, therefore in order to undertake these activities, the Law Society is also an Appointed Representative of Miller.