Powered by
MOMENTUM
MEDIA
The monopoly held by a wholly owned subsidiary of the Law Society of NSW over the state’s professional indemnity insurance is being fought by a group of solicitors who demand more choice.
Until Attorney-General Michael Daley is prepared to open the market to competition, approximately 70 per cent of NSW solicitors are locked into insurance provider Lawcover, a wholly owned but independent subsidiary of the Law Society of NSW.
For practitioners who spoke to Lawyers Weekly on the condition of anonymity, the result has been steadily rising premiums.
In addition to flexibility, they want greater transparency and accountability around the Lawcover/Law Society structure. An article published by The Australian in March revealed the insurance provider had generated around $14 million for the society last year.
“The Law Society regulates and represents solicitors while also owning the compulsory insurer. That structure warrants close scrutiny and transparency,” a spokesperson with the advocacy group NSW Solicitors for PI Choice told Lawyers Weekly.
“For NSW-only practices, there is no practical flexibility; it is Lawcover’s policy terms or no practising certificate.”
Under the Legal Profession Uniform Law (NSW), they are required to hold or be covered by the approved insurance policy before they can engage in legal practice. An April 2024 decision of the NSW Court of Appeal in The Law Society of NSW v Attorney General of NSW; ABC Insurance v The Law Society of NSW confirmed as much.
The NSW Lawyers for PI Insurance spokesperson said sole practitioners and small firms pay a higher effective rate per dollar compared to larger firms, “and that difference is not necessarily explained by claims history”. Firms with offices in other states have the choice to opt for the insurance provider in those jurisdictions.
One lawyer disclosed their most recent premium was 4.04 per cent of their practice’s estimated annual income. Another said their premiums steadily increased over a five-year period, despite very little changing in terms of the practice’s structure and risk level.
Material shown to Lawyers Weekly revealed that between 2022–23 and 2024–25, one firm’s premium jumped 20 per cent. The level of cover remained stagnant at $2 million, with a $10,000 excess ceiling.
When the excess ceiling increased to $20,000 in 2025–26, so too did the premium. However, despite the ceiling dropping back down to $10,000, the premium as a proportion of gross fee income (GFI) increased from 3 per cent in 2025–26 to 3.7 per cent in 2026–27.
“Our premium has increased significantly over the past five years, despite having no claims and maintaining prudent risk controls. The deductible has also increased – in most insurance markets, a higher deductible would ordinarily reduce the premium,” the lawyer said.
“The absence of choice for NSW solicitors is stark.”
Do you feel the current compulsory insurance scheme gives your practice adequate choice and flexibility?
Would you support NSW solicitors having access to more than one approved professional indemnity insurer, provided minimum cover standards are maintained?
Lawcover chief executive officer Kerrie Lalich told Lawyers Weekly premiums are calculated by reference to risk and GFI.
“As a result, a practice’s total premium may increase over time because of growth in fee income, changes in the practice’s risk profile or other specific factors, even where Lawcover’s underlying premium rate has not increased. Premiums are not determined solely by whether a firm has made a claim,” Lalich said.
As for the price difference between small and large firms, Lalich said Lawcover’s pricing model is actuality based and considers the risk-per-dollar of GFI across different practice types and sizes.
“Effective premium rates are therefore not expected to be identical across the profession because different practice segments can present different risk profiles,” Lalich said.
Responding to the claims of climbing premiums, a spokesperson for the Law Society of NSW said it approves Lawcover’s directors and board members, but the insurer’s operations – including financial operations and output – are independent of the Law Society.
Earlier this month, material recording communications between the Law Society, Lawcover and the Department of Communities and Justice (DCJ) were released, including what the NSW Solicitors for PI Choice claimed were “threats” to leave the market.
In a February 2023 response to an application by ABC Insurance to offer its services to the NSW profession, then-president Jennifer Ball told the DCJ’s deputy secretary of law reform and legal services, Paul McKnight, that Lawcover may need to consider being for-profit.
On the claimed “policy issues and considerations”, Ball said there were a broad range of counterfactuals regarding the future market for PII, “including, for example, where Lawcover is operating on a for-profit basis, or where Lawcover is no longer a provider in the market”.
During a mid-March budget estimates hearing, member of the NSW Legislative Council, John Ruddick, brought the $14 million profit up to Daley, and claimed the “huge amount of money” was giving the society “an incentive to retain the current arrangements”.
In response to whether he agreed, Daley said: “I hope so, because if they exit the market, we’re going to be in all sorts of trouble.”
In a letter to ABC Insurance director David Sandig last July, Daley acknowledged competition can drive premium decreases and policy innovation, but the solicitor’s PII market “has some special features that may impede the full benefits of competition”.
One such feature is an insurer must provide indemnity for run-off liabilities for a minimum of seven years from the date the practice ceases to operate or the date of the expiry of the insurance period.
Daley referred to the risk premium levels may also return to existing levels and be “somewhat higher” due to marketing and search costs.
There was also the substantial risk of premium volatility “and more general volatility” as new insurers would allegedly “come and go based on the viability of the market to provide profit”.
“Volatility in the PII market has historically caused significant problems for legal practitioners and consumers of legal services, and necessitated significant government intervention,” Daley said.
According to Ball’s letter, abolishing the monopoly in the United Kingdom – which, she admitted, was due to it being “very poorly managed” – led to run-off cover becoming either unaffordable or unavailable, and the mandatory PII limit dropped from $2 million to only $500,000. It “significantly compromised consumer protection”.
In an October 2024 report commissioned by the Attorney-General, Deloitte confirmed the existence of these risks and confirmed there was currently a “high level of market and price stability along with market coverage and accessibility” under the Lawcover monopoly.
However, it also acknowledged the “potential benefits” of introducing a competition to the NSW market, including the potential for lower premiums – especially in the short-term as providers compete for market share, and for lower-risk firms – and would bring it into alignment with other professions, such as barristers and accountants.
While Deloitte found premiums would likely increase in the longer term, “the magnitudes are small, so they are unlikely to lead to significant affordability or accessibility issues”.
The report noted there could be policy mitigants, such as price regulation, policy monitoring, risk-pooling and risk management levels, but said these could take years to develop and implement.
ABC Insurance claimed it would have kept its premiums in the range of 35 to 45 per cent lower than those offered by Lawcover for the 2025–26 year had it not been blocked from the market. It also claimed to be able to provide a more “extensive range of cover”.
In response to questions from Lawyers Weekly, ABC Insurance’s director said there is a “clear conflict of interest in a regulator owning an insurer that insures the entities it regulates”.
Sandig added that a “blind eye should not be turned to such an obvious conflict of interest at the heart of the legal system”.
“The Law Society and Lawcover Insurance should have nothing to fear from competition if they were pricing appropriately for risk, except, of course, their cherished monopoly control,” he said.
According to NSW Lawyers for PI Choice, a request for a Law Society members vote in December 2025 was refused, as was a March request to have a motion put to members during a general meeting.
“The government accepts that competition can drive lower premiums and policy innovation, yet the monopoly remains.
“In a compulsory market, practitioners are entitled to know why choice is being withheld and how the current structure serves the profession and the public,” the spokesperson told this masthead.
Under the Law Society of NSW’s constitution, a general meeting of members must be called within two months of receiving a written requisition from 250 solicitor members. A spokesperson told Lawyers Weekly that “no such requisition has been received”.
A subsidy and a “modest reduction” offered after reports were made in mainstream media and the NSW Parliament earlier this year were welcomed as a “step in the right direction”, but NSW Lawyers for PI Choice said it did not resolve the underlying issues.
“The broader concern remains whether the pricing model reflects risk across sole practitioners, small firms and larger practices,” a spokesperson told Lawyers Weekly.
The group has demanded at least one alternative insurer for the 2025–28 practising year, an unredacted copy of a Deloitte report into the NSW insurance market, and an independent review into the costs structure by a body unconnected with the Law Society or DCJ.
