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Member, Beacon International Group, Ltd.
LONDON--There were further decreases in premium rates at the annual renewal for solicitors professional indemnity cover, although the market is expected to harden according to London-based Aon Professional Risks, part of Aon Corp.
Under regulations set out by the Law Society, the body that supervisors the legal profession in the United Kingdom, all law firms in England and Wales are required to renew their professional indemnity insurance by October 1 each year. At this year's renewal, law firms experienced an average rate reduction of 25%, according to Aon.
In a statement, the company described the U.K. insurance market for solicitors professional indemnity cover as a "buyers market, which is in a soft cycle with significant levels of competition." According to Nicholas Gilbert, director at Aon's professional risk division: "There is a general perception that the state of pricing in the market is unsustainable, as claims experience will outgrow the premium income received, which will have a knock-on effect for long-term stability in the market."
"We anticipate that the market will harden going forward and would expect premium rate increases to be caused by one of a number of factors. These might include a rise in reinsurance costs, some form of new industry regulation or a serious withdrawal from the underwriting market," Mr. Gilbert said.