The Productivity Commission has called for an independent review of lawyers’ professional indemnity (PI) insurance.

Its Access to Justice Arrangements report notes that in many jurisdictions lawyers’ PI is provided through a captive insurer.

The resulting lack of competition drives up the cost of cover, which in turn creates an affordability issue for consumers.

The commission says the current system also creates an unnecessary layer of regulation, given the Australian Prudential Regulation Authority already oversees insurance products.

Some legal practitioners fear opening the market could lead to a reduction in quality, as has apparently been the case in the UK.

But the commission says it “does not accept the proposition that a single provider model is inherently superior” and recommends a review “to consider the matter from a national perspective”.

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