The Assigned Risk Pool (ARP) for UK law firms does not breach the Competition Act, the High Court has ruled.
Solicitor Graham Ross had challenged the Assigned Risk Pool, which provides professional liability insurance for law firms who are unable to find cover in the market, after he was pursued for the non-payment of premiums.
Law practitioners in England and Wales must purchase coverage from an insurer approved by the Law Society or from the ARP, an insurer of last resort whose policies are jointly underwritten by Law Society-approved insurers
Ross had obtained PI insurance for £16,865 for the year September 2000 to August 2001 through Chubb. He failed to find insurance for the following year and so the ARP provided the necessesary PI insurance in order for him to be able to continue to practice.
Ross was notified that the premium for the year was £56,847.73. He accepted the cover, but failed to pay the premium. He claimed in his defence that the ARP was anti-competitive and the premium was excessive.
Ross claimed the ARP's practices violated the Competition Act 1998, arguing that it was in the approved insurers' interest to refuse to cover lawyers, as doing so forces them to buy more expensive insurance from the ARP.
Hearing the case, Judge Sir Andrew Morritt of the High Court's Chancery Division, said he found no evidence that the ARP's scheme violated the Competition Act.
In his judgement, Morritt said: “The scheme did not deny to Mr Ross, or any other solicitor, the opportunity to obtain insurance in a competitive market.
“He obtained such insurance in the previous year and there is no reason to suppose that if he had applied for it promptly he could not have obtained it for the indemnity year 2001/02.
“It is true that all qualifying insurers participate in ARP but the ARP is not a separate market but part of a scheme which, as a whole, is pro-competitive.
“It is likewise true that premiums payable for insurance within the ARP are assessed differently from those payable for insurance outside it but no solicitor who can obtain open market insurance outside the ARP is forced into it.”
Morritt dismissed Ross' defence and ordered him to pay the premium of £56,847.73, plus interest.
