Solicitors' premiums to rise 50pc
SOLICITORS are facing hikes of up to 50pc when they renew their professional indemnity insurance next month, senior industry sources have warned.
The higher premiums follow a surge in claims against solicitors over the last three years, with some insurers seeing notified claims more than double.
The market is also significantly less competitive this year, after four of the nine insurers offering cover to solicitors quit the market in recent months.
But there is some reprieve for the legal industry, after insurers reluctantly agreed to reinstate a fund to cover solicitors who can't secure insurance on the open market. "It's an incredibly difficult market," said one senior insurance source, citing "astonishment" at the level of claims over the last three years.
Cases include the Revenue suing solicitors for systemically failing to pay stamp duty and clients suing over property deals gone wrong.
"For every high profile case like (disgraced solicitors) Thomas Byrne or Michael Lynn, there are hundreds of similar cases lower down the food chain," one source said. Legal sources disputed this with senior figures saying there was "no evidence" of widespread wrong-doing by solicitors.
Insurance sources say premiums for solicitors have already doubled since 2008, with some sources warning of another 50pc rise this year.
"Insurers are making massive losses on solicitors' PI (professional indemnity), the premiums have to go up," one commercial insurer warned.
Laurence Shields, chairman of the Solicitors' Mutual Defence Fund (SMDF) which insures about 27pc of the market, said premiums "wouldn't go down" but declined to be drawn on the quantum of increases.
But some legal sources remain optimistic, with newly elected Dublin Solicitors Bar Association president Stuart Gilhooly saying he expected this year's increases to be more modest than those seen in recent years. At the 2009 renewal season, the solicitors' PI market was served by nine insurers, including the SMDF. This year, Quinn, RSA, AG Dore and Hiscox have all pulled out.
The four remaining players include XL Insurance, which entered the market last year and secured a market share of close to 27pc.
"XL are in a good position because they don't have the historic losses that others have," said one industry source.
Meanwhile, the decision to reinstate the Assigned Risk Pool (ARP), which sees all insurers share the tab for those solicitors who can't secure insurance, has been greeted with disappointment by many insurers.
"The ARP will definitely make a loss and we'll all have to share that loss," said one source.