Insurers will fund Law Society indemnity scheme

Insurers will fund the Law Society's new professional indemnity scheme through a "work transfer fee", Solicitors Journal can reveal.

Chancery Pii, the result of a joint venture with Miller Insurance Services, aims to help firms with one to four partners access indemnity insurance from rated insurers.

The move follows the collapse of unrated Latvian insurer Balva, which insured around 1,300 firms, earlier this year.

Chancery Pii provides access to a panel of rated insurers but does not provide advice or charge brokers' commissions or fees.

The Law Society said it was "increasingly concerned" about the level of commission paid to some brokers, which "does not always appear to represent value for money for solicitors".

Firms complete an online proposal form, but they get a quote only if they meet the criteria - yet to be disclosed - set by the panel of insurers, all of whom are rated at least A- by Standard & Poor's.

A spokeswoman for the Law Society said there has been "a consistently high level of interest in Chancery Pii since launch" and it was pleased with the high number of registrations.

She went on: "The society has invested both in the establishment of Chancery Pii and as a shareholder in the business. The particulars of our expenditure and investment are commercially sensitive.

"The intention of the business is to be self-funding further to the initial capital investment made by the shareholders."

She added that the scheme would be funded by the panel insurers, to reflect the work it carries out as an agent.

Des Hudson, chief executive of the Law Society, said many law firms had resorted to using unrated insurers, 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"A number of rated insurers have withdrawn from this segment and the gap has been filled by unrated insurers, some of whom enter for a few years before withdrawing or, worse, becoming insolvent.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.

"We have created a solution that provides a quick and easy way to access rated insurers, and that emphasises security, quality and stability. We continue to advise firms to consider the financial security of insurers in the market."

Chancery Pii is the trading name of Six Clerks Insurance Services, a joint venture by the society and Miller Insurance Services.

Clive Sutton, honourary secretary of the Sole Practitioners Group, said: "While there is a risk of inconvenience and aggravation, we would not tell anyone specifically not to go to an unrated insurer. Premium level is critical."