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As many solicitors feel the sting of rising premiums, the NSW Legislative Council has resolved to examine the Attorney-General’s decision to maintain a monopoly over small firms’ insurance.
The NSW Legislative Council last week voted 23:14 in favour of forming a select committee to inquire into Attorney-General Michael Daley’s decision to maintain Lawcover’s monopoly over professional indemnity (PI) insurance for small legal practices.
The select committee into the potential for competition reforms regarding solicitors’ professional indemnity insurance, established on 5 August, will be chaired by independent MP Taylor Martin, with support from Libertarian Party MP John Ruddick as deputy chair.
The members are the Liberal Party’s Susan Carter and Chris Rath, Sue Higginson from The Greens, and The Nationals’ Nichole Overall.
It will examine the impact of the current settings resulting in Lawcover’s effective monopoly, the current pricing and opportunities to drive competition via new market entrants, and avenues of legislative reform allowing for the new competition.
As reported by Lawyers Weekly late last month, approximately 70 per cent of NSW solicitors are locked into Lawcover, a wholly owned but independent subsidiary of the NSW Law Society. Only practices with offices in other jurisdictions have another choice.
This structure “warrants closer scrutiny and transparency”, said a spokesperson with the advocacy group, PI Choice.
On the inquiry news, a spokesperson said: "Where participation is compulsory, transparency and accountability should not be optional."
"The Legislative Council’s decision to establish a Select Committee Inquiry is a welcome step towards greater transparency and accountability in a scheme that affects thousands of solicitors across New South Wales.
"Professional indemnity insurance is a compulsory requirement for legal practitioners, and this inquiry provides an important opportunity to examine whether the current arrangements continue to deliver the best outcomes for solicitors, consumers and the broader community," the spokesperson said.
One lawyer shared their most recent premium accounted for 4.04 per cent of their practice’s estimated annual income, while another said their premium as a proportion of gross fee income 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,” one lawyer said.
Results from a poll within the article revealed that half of respondents noticed a “significant” increase in their premiums over the last three to five years. Another 30 per cent reported a “moderate” increase.
Asked whether they felt the current scheme provided them with adequate choice, the majority voted “no”. On whether they would support more choice, just under 90 per cent voted “yes”.
During a budget estimates hearing in March, Ruddick questioned Daley on the news that the Law Society had pocketed approximately $14 million in profits from Lawcover over the last year.
Ruddick claimed this “huge amount of money” was giving the Law Society “an incentive to retain the current arrangements”.
Daley said if Lawcover were to exit the market – as it has allegedly threatened to do – the profession will be in “all sorts of trouble”.
A 2024 Deloitte report commissioned by Daley confirmed concerns that greater competition could increase volatility, and the current market was providing stable prices and accessibility.
While premiums would likely increase in the long-term with competition, Deloitte found the magnitudes to be small, “so they are unlikely to lead to significant affordability or accessibility issues”.
Read more about Lawcover’s monopoly and the challenge by NSW solicitors for more choice here.
