Law firms do not face higher insurance premiums because they conduct residential conveyancing work or are run by black and ethnic minority lawyers, an authoritative study has indicated.

Law Society-commissioned research into last year’s professional indemnity insurance renewal found that while more firms overall had experienced difficulties during the 2010/11 renewal period compared to the previous year, the ethnicity of firms was unlikely to have been a factor.

The survey of 399 firms and a further 359 BME practices, conducted by market researchers Exodus, found that whereas 79% of firms had reported ‘no difficulty’ in renewing their PII in 2009/10, this dropped to 64% of firms last year.

The smaller the firm, the more likely they were to have experienced problems, which was partly explained by the withdrawal of insurer Quinn from the PII market.

Firms also faced higher premiums than previously, with 70% reporting an increase on the amount paid in 2009/10.

Sole practitioners paid a median premium of £6,350, while firms with more than 25 partners paid a median premium of just under £500,000.

In terms of the impact of ethnicity on premiums, only 4% of BME firms felt that their ethnic origin had affected the amount they were charged.

The report suggested that where BME firms had experienced difficulties, this was likely to be due to their small size rather than ethnicity.

However, BME firms were seven times more likely to have been required to submit their CVs to insurers.

The study noted that BME firms are disproportionately represented in the Assigned Risks Pool.

In relation to conveyancing, the findings did not indicate a statistically significant relationship between the amount of conveyancing work undertaken and the rate of premium charged.

The Society noted that this was at odds with the ‘common perception’ that insurers attribute a higher risk to residential conveyancing work.

Last week the Gazette revealed that a Financial Services Authority investigation had concluded that there was ‘no evidence’ of discrimination against BME solicitors by insurers.

Law Society chief executive Desmond Hudson said: ‘It is encouraging to see that the survey findings shows only 4.4% of BME firms felt that their ethnicity had an impact on the premium they paid and that the size of a firm, its claims history and in-year changes to the number of fee-earners have the biggest effect the firms’ PII premium.

‘The Law Society, Equality and Human Rights Commission and others including the Solicitors Regulation Authority have worked together to attempt to ensure that any potential for any form of discrimination is removed.

‘The Association of British Insurers and the FSA have also undertaken some work in this area.

‘However, collectively, we must continue to work ensure insurers continue to move towards a PII process that is transparent and that risk factors are properly understood by firms.

‘We have requested to be informed of the ongoing progress in this respect so that any differences in treatment between groups of our members can be seen to have legitimate objective justification.’ As in previous years, the Law Society will be providing a PII telephone helpline to assist firms in the build up to this year’s renewal.