Four insurance firms secured more than half the market share of professional indemnity insurance in 2011, according to figures released by the Solicitors Regulation Authority.

More than 18% of law firms took out initial PII with XL Insurance, the leader in the market, for 2011/12.

The next most prominent insurers were Hannover (12.5%), QBE International (11.8%) and Travelers Insurance (11.6%). In total, 10,917 practices operating in England and Wales secured compulsory qualifying insurance with a record-equalling total premium income of £255.7m.

Just 32 firms failed to find PII on the open market by the renewal date of October 1 and entered the Assigned Risks Pool (ARP), compared with more than 400 at this stage last year.

Antony Townsend, chief executive of the SRA, said: ‘During consultation on our financial protection arrangements, we found that one of the biggest challenges facing us was the need to manage down the number of firms in the ARP, which was placing a burden upon other firms and inhibiting a competitive market for PII.

‘Therefore, we announced measures to address this as part of the key changes to the arrangements for client financial protection in April.

‘These figures demonstrate that our programme of reforms is having the intended effect. We continue to monitor the effect of these changes not only upon firms in the ARP, but also small firms who are particularly vulnerable to increases in insurance premiums.’

The amount of time a firm can remain in the ARP has now been reduced from 12 to six months.