Update on competition and choice of professional indemnity insurance for NSW solicitors for 2025-26

30 January 2025

ABC Insurance (ABC) intends to offer a professional indemnity insurance policy to solicitors practising in NSW for the forthcoming practising year, commencing 1 July 2025.

ABC’s policy is an “approved insurance policy” for this period because it meets the objective statutory requirements under s 210(1) of the Legal Profession Uniform Law (LPUL) for the 2025-26 practising year. ABC has independent confirmation that it meets these requirements.

In accordance with the Judgment of the Court of Appeal, ABC’s policy will continue to be an “approved insurance policy” provided that the NSW Attorney General either does not approve any insurance policies under s 95 of the Legal Profession Uniform Application Act (LPUA) or the Attorney General approves ABC’s policy.

The Judgment of the Court of Appeal is available here.

An application to the High Court seeking leave to appeal was unsuccessful.

We understand that the Law Society’s wholly owned and controlled subsidiary, Lawcover Insurance, has submitted an application for approval under s 95 of the LPUA, for the 2025-26 practising year. ABC has also made an application for approval by the Attorney General under s 95 of the LPUA.

We understand that the Attorney General is currently considering both applications and that both have yet to be determined.

Should the Attorney General approve one or more policies via s 95, the approval pathway under s 210(1) would close for the relevant practising year, and the approval of those polices currently approved under s 210(1) would be extinguished.

There is no apparent reason (on the information available to ABC Insurance) why Lawcover Insurance’s policy should not meet, or be capable of meeting, the objective statutory requirements in s 210(1) of the LPUL. Indeed, as a regulator and a member body of such an important profession, there is every good reason why the Law Society should ensure that its wholly owned subsidiary’s policy meets the minimum standards. We are not aware of any reason why the Law Society should allow Lawcover Insurance to provide a sub-standard policy to solicitors. (ABC has not seen Lawcover Insurance’s application or policy wording for the 2025-26 policy year.)

If Lawcover Insurance’s policy meets the minimum standards, as is the case for ABC Insurance’s policy, Lawcover Insurance’s policy will already be an “approved insurance policy” within the meaning of s 210(1) for the 2025-26 practising year and accordingly there does not appear to be any appropriate reason for the Law Society and Lawcover Insurance to seek a further approval from the Attorney General.

Given this, ABC has invited the Law Society of NSW to cause its wholly owned and controlled subsidiary, Lawcover Insurance, to withdraw its application for approval by the Attorney General under s 95 of the LPUA. ABC has also informed the Law Society that, if Lawcover Insurance’s application is withdrawn, ABC would be prepared to withdraw its application for approval under s 95 of the LPUA so that both ABC’s and Lawcover Insurance’s policies could then rely on approval by reference to the objective statutory requirements in s 210 of the LPUL. ABC made this invitation to the Law Society on the assumption that Lawcover Insurance has the capability to ensure its policy meets the minimum standards and in the absence of any information to suggest that Lawcover Insurance is or would be unable to do so.

Accordingly, the Law Society is in a position to ensure that there will be choice and competition.

Indeed each year the Law Society issues practising certificates to thousands of solicitors whose applications are backed by policies from other jurisdictions which are not approved by the Attorney General.

While, at the time of writing to you, we have not received a response from the Law Society to our invitation, we can see no appropriate reason for the Law Society to reject ABC’s invitation.

In case the Law Society and Lawcover persist in seeking the Attorney General’s approval in accordance with s 95, ABC has written to the Attorney General requesting that he refrain from approving any insurance policies under s 95 of the LPUA so that all policies for this period must be approved under s 210(1), in the interests of fairness as well as choice and competition.

The Attorney General’s authorisation under s 95 of the LPUA is specified and limited. In addition, it is unclear what possible rationale there could be for the Attorney General to assume a regulatory role for the Market, with all the difficulties and potential financial and other risks that entails. The Attorney General is in a position to avoid these risks and obligations by leaving the approval to be determined by the objective standards in the s 210(1) Pathway.

Notwithstanding this, the Attorney General may choose to approve all applications with policies that meet the statutory requirements, and we trust the Attorney General will not act to block competition or act in favour of the Law Society or approve a sub-standard policy.

In other words, if faced with a decision, the Attorney General can ensure that choice and competition are introduced for the coming year, on a level playing field basis.

Solicitors have expressed concerns to us, and ABC shares those concerns, that there appears to have been, and appear to continue to be, significant resistance to the introduction of choice, apparently with a view to maintaining the monopoly. Whilst the apparent justification of the monopoly remains opaque, ABC maintains its concern that conduct in support of the monopoly is anti-competitive and has expressed that concern to councillors of the Law Society, the directors of Lawcover Insurance and the Attorney General. ABC is investigating these concerns and ABC understands that the ACCC is also looking into this matter.

In summary, competition will be realised automatically if the Law Society ensures that it does not jeopardise ABC’s approval. Failing this, the Attorney General can allow competition to flow automatically if he does not approve any polices thereby ensuring that the s 210(1) pathway remains open. Alternatively, it is open to the Attorney General to approve both policies.

The benefits of choice and competition are well-recognised. In an address to the Competition and Consumer Workshop 2021 of the Law Council of Australia, on 27 August 2021, Mr Rod Sims (Chair of the ACCC at the time) gave an address entitled “Protecting and Promoting Competition in Australia”. Mr Sims noted that: “Competitive and open markets are critical to the prosperity of Australians. Competitive markets work much better for consumers, they increase innovation and productivity, and they lead to better outcomes for primary producers and small businesses.”

ABC remains committed to participating in a market that provides choice and competition to NSW practitioners, which will be in the interests of the profession and the people of NSW.

We look forward to being able to provide you with an alternative choice for your compulsory professional indemnity insurance for the coming year.