Small firms crippled by high professional indemnity insurance premiums

Smaller sized law firms throughout the length and breadth of the West Midlands region claim that, thanks to crippling PI Insurance premiums, they are facing the possibility of being driven right out of the market.

A new member survey conducted by Birmingham Law Society recently revealed that across the West Midlands sole practitioners have experienced massive hikes to their business liability insurance rates for 2010.

Larger-sized firms, however, weathered the storm much easier; on average these larger firms only had to cope with hikes of less than ten per cent.  In some instances, a select number of companies managed to negotiate a discount to their business insurance premiums.

Those in the legal profession are required by law to possess professional indemnity insurance cover to safeguard any clients who file negligence claims.  The gap is widening between the rates paid by large and small firms, however, and Birmingham Law Society’s president Dean Parnell stated that that gap has recently become a yawning gulf.

Mr Parnell made the prediction that as a result the profession will undergo a higher rate of consolidation, leading a large number of High Street law firms to consider their practice areas very carefully.

There is more than PI insurance rate increases engendering concern, however.  All PI insurance renewals are set up so as to occur annually on the 30th of September, which has continued to generate difficulties for the profession.  Several firms have lodged complaints regarding the complexity and length of proposal forms.  Additionally many others feel that the deadlines to take an offer up are simply impossible to meet reasonably.

One firm has been rumoured to have had a stretch of just seven hours in order to formulate a response, though their broker did finally grant them a three-day extension.

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