ABC Insurance, which is seeking to enter the NSW solicitors’ professional indemnity market, says the Attorney General’s role in approving Lawcover as the sole provider should end. 

The insurer’s submission to a parliamentary committee inquiry says a Uniform Law, which is aimed at regulatory consistency across states, includes comprehensive minimum policy standards and insurers are federally regulated. 

“The Uniform Law does not provide the Attorney General with a regulatory role and it is not appropriate or necessary for the Attorney General to assume any such power, particularly when the Attorney General and the Department of Communities and Justice are not equipped with the specialist resources or skills to do so,” it says. 

Liberty Mutual-backed ABC has sought to offer mandatory PI cover for NSW solicitors and law firms but Attorney General Michael Daley has not granted approval, leading to the parliamentary inquiry into the potential for competition reforms. 

ABC’s recommendations also include that the department be investigated “to explore whether it acted lawfully and without bias in its advice to the Attorney General to maintain the Law Society’s monopoly” and that the Law Society of NSW should either divest its interest in Lawcover, or a different body become the regulatory authority. 

It argues the current system creates a monopoly, risking a “single point of failure”, inflates premiums and creates a two-class legal system that favours large law practices operating in multiple jurisdictions that have choice. 

Lawcover has stressed it operates like a mutual and is not structured as a conventional profit-maximising insurer, a commercial entrant would have an incentive to “cherry pick” lower risk practices and it has brought market stability.  

It says Victoria and NSW data shows premiums for practices earning gross fee income of less than $100,000 are comparable and in many cases its premiums are lower, and its constitution prohibits paying dividends to its Law Society shareholder without Attorney General approval. 

A Department of Communities and Justice submissions says the approval pathway involving the Attorney General reflects a longstanding NSW position that professional indemnity insurance should have independent scrutiny. 

“The Attorney General’s approval of the policy type, level of insurance and policy terms, together with consideration of broader public interest factors ensures compliance with the Uniform Law and provides certainty that an approved policy satisfies the statutory requirements for legal practice in NSW,” it says.