Solicitors in NSW face the prospect of having to pay a special levy to make up the shortfall in their PI insurance following the HIH collapse.

According to Australian Financial Review legal editor Chris Merritt, the gap is about $138 million – a lot more than the $50 million expected just two months ago.

The Solicitors’ Mutual Indemnity Fund, which was expected to cover the shortfall, only has $74 million of net assets, and solicitors may be called on to pay a special levy to close the gap. HIH had a monopoly on solicitors’ PI policies.

Over the past year, several large national law firms have moved their LawCover insurance to Victoria, where the market is more competitive and rates are considerably cheaper.