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New PII option for small firms unveiled

The Law Society has today unveiled a new direct route to professional indemnity insurance cover for small solicitor firms.

Chancery Pii, a joint venture between the Society and Miller Insurance Services LLP, will provide PII cover for firms with between one and four partners.

Chancery Pii provides direct access to insurers with at least A- (Standard & Poor’s) or equivalent financial security rating but does not provide a broker service or any advisory services. It does not accept enquiries from brokers, pay any broker commissions or charge any management fees. The absence of broker commission and management fees will create a viable level of profitability for insurers, so encouraging a long term presence in the market for this segment.

Commenting on the market reality for smaller firms Law Society Chief Executive Desmond Hudson said: “We have had concerns about instability of the solicitors’ PII market, particularly the 1-4 partner segment, for some time now. Many firms have resorted to using an unrated insurer – 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 A number of rated insurers have withdrawn from this segment and the gap has been filled by unrated insurers, some of whom enter for a few years before withdrawing or, worse, becoming insolvent.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.

“It was right for us to explore options with the insurance market to increase the availability of choice for our members, particularly smaller firms.

Chancery Pii is the result of this. We have created a solution that provides a quick and easy way to access rated insurers, that emphasises security, quality and stability. We continue to advise firms to consider the financial security of insurers in the market.” Chancery Pii will place insurance with a panel of participating insurers, each with a financial strength rating of at least A- (Standard & Poor’s) or equivalent, that will each take a share of the liability and premium for a policy in an agreed percentage.

Why choose a direct approach that does not use a broker?

The Law Society has made previous attempts to work with brokers to develop initiatives that would assist our members, for example, a voluntary code of conduct or standard letter of retainer or service standards. However, little support was received from brokers and industry-wide consensus on appropriate service levels hasn’t been achieved.

The Law Society is increasingly concerned about the level of commission paid to some brokers. The scale of the commission payments does not always appear to represent value for money for solicitors. The prevalence of tied arrangements within the 1-4 segment means that many of our members receive an execution only service and not advice. The advice given by some brokers is of variable quality, with some brokers using a disclaimer to avoid liability when placing solicitor firms with unrated insurers.

It is difficult for firms within the 1-4 partner segment to cover the entire market via a single entry point.

Chancery Pii offers one easy way for solicitors to consider as part of a full market exercise to assess their renewal options. For general information about how to do this, see the, “Law Society’s PII Made Simple” on our PII web page.

More about Chancery Pii:

Chancery Pii is a trading name of Six Clerks Insurance Services Limited, which is an Appointed Representative of Miller Insurance Services LLP.

Six Clerks Insurance Services Limited is a joint venture between Miller Insurance Services LLP (Miller) and the Law Society.

The Law Society has endorsed Chancery Pii and its products. Such promotion and endorsement is considered to be a regulated financial services activity and, therefore in order to undertake these activities, the Law Society is also an Appointed Representative of Miller.

Ends

Notes to editors: For more information on Chancery Pii visit the Law Society website.

The Law Society has produced two guides to help members with professional indemnity insurance.

The Solicitors Regulation Authority (SRA) does not undertake any solvency checks on insurers and does not currently require a minimum level of financial security for participation in the solicitors’ PII market. The SRA has, however, introduced a transparency requirement for all participating insurers. Insurers must now disclose whether or not they have a financial security rating and the provider of this rating.

The SRA and the Law Society do not vet, approve or regulate insurers. The SRA enters into the participating insurers’ agreement with insurers each year to ensure that they provide policies in accordance with the minimum terms and conditions in the SRA Indemnity Insurance Rules. While the SRA requires transparency of financial security ratings as part of this agreement it does not currently mandate that insurers have a certain rating or indeed any rating at all.

Regulation of insurers is undertaken by the Financial Conduct Authority, or, where an insurer from another jurisdiction is passported into the UK system, the financial regulator of that jurisdiction.

The Law Society is the independent professional body, established for solicitors in 1825, that works globally to support and represent its members, promoting the highest professional standards and the rule of law.

Press contact

Catherine Reed
Law Society Press Office
+44 (0)20 7320 5902
catherine.reed@lawsociety.org.uk