Law Society research has found a growing divide in the PII market with smaller firms and black and minority ethnic (BME) firms finding renewal tougher than the wider profession.

The survey found more BME firms (16%) than wider profession firms (6%) were not offered cover by their previous insurer. BME firms were notified of a decision by insurers later than the wider profession (56 days compared to 44 for the wider profession). The survey said: “It may be that the set of criteria being applied by insurance firms when deciding whether to provide insurance and at what price is in some circumstances having a disproportionately adverse affect on BME firms.” But according to Afua Hirsch, writing in the ‘Guardian’, BME lawyers are claiming racial discrimination in being refused compulsory insurance. “Some minority ethnic lawyers have seen their professional indemnity insurance rise by 800%, despite having no complaints or claims against them.”

The survey states that “it is difficult to explain these differences given the diverse risk profiles of these firms, the small sample sizes and a lack of understanding of the actuarial models used by insurers to assess firms’ insurance risk.” It finds that BME firms are more likely to undertake work in immigration and crime than the wider profession, and less likely to undertake work in probate, wills and trusts. Immigration work made up a higher proportion of BME firms’ total gross fee income (21%), than the wider profession (3%). BME firms are more likely to identify themselves as High Street firms (68%, compared to 53% of the wider profession) and based in Greater London (50%, compared to 18% of the wider profession). “BME firms were also more likely to have a foreign sounding name (42%, compared to 3% of the wider profession).”

Law Society chief executive Desmond Hudson says: “We are particularly concerned by indications of different treatment of BME-owned firms. This is an issue where we are taking urgent steps to clarify and resolve the matter.” Accordingly an action plan has been drawn up with five key stages. Firstly, solicitors will be asked to send information about their experience of the PII renewal round if they believe they have been discriminated against in some way. Secondly, there will be urgent discussions with the Association of British Insurers about the ways in which BME solicitors appear to have been disadvantaged during the 2009 renewal round with a view to erasing that disadvantage this year. Then the formal advice of the Equality and Human Rights Commission will be sought further to earlier informal discussions, followed by a review of the way that insurers assess risk. Finally there will be discussions with the SRA about steps it can take with Qualifying Insurers to eradicate discrimination.

The full text of “Professional indemnity insurance survey; 2009-10 renewal” can be found at:-

http://www.lawsociety.org.uk/new/documents/2010/pii_survey_april2010.pdf