Professional Indemnity Insurance Management

2018/19 Annual Report

The Professional Indemnity Insurance Committee (PIIMC) has, as required by the Legal Profession Act, put in place the PI insurance arrangements for the 2019/2020 financial year. The negotiations were similar to previous years. The insurance placement includes consideration of the actuarial report prepared by our actuary, advice of our broker and our staff.

Ultimately, the annual contribution rate increased by an average of approximately 10%, primarily due to deterioration in expected claims costs and increased Underwriter premiums. We hope to be in a position to stabilise rates in future years. However, this, as always will depend on claims outcomes and underwriting market conditions. I would mention also claims numbers in the last three years continue to show an increase on the longer term average.

PIIMC has continued its focus on risk management initiatives that will, over time, lower the incidence and cost of claims leading to more stable contributions subject of course to the underwriting market. The most visible sign of this is the ongoing successful risk management seminar programme.

We have continued to introduce new risk management initiatives. For the 2019/2020 risk management seminar programme, we have included four webinars that will make risk management training more accessible to regional and remote practitioners.

The Law Mutual team has highly experienced insurance capabilities that enabled us to fully analyse the PI insurance arrangements to ensure they are fair and equitable to practitioners and their clients while maintaining a very broad coverage at a reasonable cost. In that regard, the Council of the Law Society has approved, in principle, a change to gross fee income as the primary rating factor for both annual contributions (premiums) and insured’s contributions (excesses).

This, together with a change to claims loadings based on five year rolling loss ratios, will improve the fairness and equity of insurance costs spread across the firms that are covered  under the Law Mutual insurance arrangements. These changes are dependent on the introduction of a new insurance system and final approval of Council.

Financially, Law Mutual is in a very sound position and neither the annual audit nor actuarial reports for 2017/2018 were qualified.

Finally I wish to thank PIIMC committee members and Law Mutual staff for their diligence and contribution for what has been another challenging but rewarding year.

For more information about this committee please email