The debate surrounding unrated Professional Indemnity Insurance (PII) providers for law firms continues to spark intense discussion across the legal sector. However, a look back at official statements reveals a striking shift in rhetoric from the Law Society leadership within a single nine-month window.
A Tale of Two Quotes: The 9-Month Shift
| Date | Statement from Des Hudson (Law Society CEO) | Position |
| August 2013 | “A number of rated insurers have withdrawn from this segment and the gap has been filled by unrated insurers, some of whom enter for a few years before withdrawing or, worse, becoming insolvent.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.” | Critical of Unrated Providers |
| April 2014 | “The fact that an insurer is unrated does not of itself mean that they are risky – some well-established, trusted insurers have chosen not to seek a rating.” | Defensive of Unrated Providers |
Context: Commercial Interests vs. Market Realities
To understand this U-turn, one must examine the commercial and regulatory background of the period:
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The Rated Scheme Launch: In August 2013, the Law Society’s critical commentary on unrated providers directly coincided with the official launch of the Law Society’s own “A-rated” PII scheme.
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Lender Panel Mandates: Mainstream mortgage lenders increasingly tightened their panel eligibility criteria, requiring conveyancing firms to hold A-rated PII cover to remain on active panels.
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The Risk of Firm Closures: A strict exclusion of unrated insurers threatened up to 20% of conveyancing practices with panel removal, potentially driving firms into the Run-Off Cover Pool (ROCP) or out of business entirely.
Regulatory Implications for Conveyancers
As the Solicitors Regulation Authority considers whether to restrict or ban unrated insurers, conveyancing firms face a delicate balancing act. While unrated cover often provides lower upfront premiums, relying on unrated providers carries severe commercial drawbacks:
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Lender Panel Removal: Many major lenders automatically drop firms using unrated PII, regardless of CQS accreditation status.
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Insolvency Exposure: An unrated insurer collapse leaves the firm personally liable for run-off costs and outstanding claims reserves.
Conveyancing firms evaluating renewal options must weigh the short-term premium savings of unrated cover against the long-term threat to their lender panel status and financial stability.
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