Law firms concerned by rising insurance costs and unrated insurers

Personal injury lawyers in the North West are concerned about rising insurance costs and unrated insurers, according to a survey from law firm O’Connors LLP.

Almost two-thirds of the surveyed firms are anticipating an increase in the costs of their professional indemnity insurance at the next renewal, and half of those expect it to be a significant increase.

Respondents also quoted insurer failures as a problem for their insurance and 60% said they choose their policy based on insurer rating rather than cost. However, 3% said they select the cheapest quote regardless of insurer rating.

The surveyed firms also said they are suffering after the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Laspo) reforms.

The survey revealed that more than 70% of personal injury local law firms believed the regulatory changes are negatively affecting their business, and only 15% believed the results would have a positive impact.

One respondent to the survey said the Laspo reforms showed “no evidence that they are benefitting customers” while another of the more than 300 managing partners surveyed said the reforms contributed to “reduced public access to the law and justice”.

The Solicitors Regulation Authority (SRA) has contacted more than a third of the firms surveyed with unsolicited mail, with 11% of these seeking assurances about financial stability.

The survey revealed that the SRA may be right to be concerned about the financial strength of law-firms in the area, as 41% of those taking the survey said they have seen a noticeable decrease in new business and 29% have seen a reduction in fee income.

O’Connors partner Nigel Wallis said: “These unsettling views are perhaps to be expected so early in the profession’s industrial revolution. From our own experience of advising law firms, we are certainly seeing the emergence of a new breed of law firm leader; individuals who are demonstrating courage and innovation in seizing market opportunities arising from the current upheaval. They may not be the strongest of the species but they do seem to be the ones most responsive to change.”