If a competitive market is established, should insurers be free to adopt risk weighting and to refuse cover?
Should there be limits on the price differentials between policies and an obligation on insurers to accept any proposal? A competitive market will not be established unless insurers are able to adopt risk weighting. Risk weighting is essential to avoid undue distortion of the insurance market through cross subsidisation. Arrangements will need to be made for the insurance of solicitors who are poor risks. Such arrangements may be an ‘assigned risk pool’, where all insurers are required to accept a certain number of high cost practitioners, or a maximum differential between the minimum and maximum premiums which could be set. A limit on the price differential between policies would ensure that solicitors continue to accept instructions in high risk areas of practice. Any limit should be struck having regard to the relative costs of claims against practitioners with poor claims records and the profits of practices in that category. Insurers should be required to accept any proposal. The
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