Swiss Re Corporate Solutions is looking to step up its presence in the professional indemnity (PI) insurance space for lawyers, saying there is an opportunity for growth despite the challenges facing the product line.

The Australian PI insurance market has been through upheaval in recent years with insurers leaving as claims increase in both number and size, with the instability likely to continue for some years to come.

“Despite the recent trend of insurers exiting the PI insurance space, we believe there is opportunity in this market,” Swiss Re Corpoate Solutions says. “Partnership and mutual understanding are critical in overcoming this challenge.”

It says complaints against lawyers have remained high in recent years and that it continues to see regular litigation against lawyers.

“Judgments and settlements in this space have been significant, with quantums sought more regularly exceeding $100 million,” it says.

“These reasons account for the need for lawyers to review the adequacy of PI cover with their broker, and the increased size of the lawyer’s PI insurance market.”

While states and territories require principals of a law practice to hold valid PI insurance – and they can access this through their own professional associations – these arrangements often only provide up to $2 million for each claim, which may not be sufficient in today’s risk environment, Swiss Re Corpoate Solutions says.

“This amount of cover is not adequate for most lawyers operating in today’s environment, in circumstances where legal costs alone can quickly erode this limit.”

The role of a traditional lawyer is not what it used to be as clients now expect more from their legal advisers.

“Lawyers are being asked to provide advice, draft documents or help close deals more quickly than ever before and consider a variety of issues that weren't in the legal landscape 10 years ago,” the company says.

“The expectation which the digital world has created means there is pressure on lawyers to provide immediate responses, and this pressure is conducive to making mistakes.

“It is for this reason that legal firms should rethink whether their professional indemnity insurance cover is adequate.”

According to Swiss Re Corporate Solutions, the changing role and expectations of lawyers in today’s digital world has been seen to impact the adequacy of PI cover in this segment.

“Compounding this problem is that many law firms have viewed PI insurance as a commodity purchase,” it says.

“In doing so, they fail to engage the right insurer who understands their business, how they manage risk and most importantly, make a long-term commitment to their firm.”