SRA indemnity reforms will drive some firms out of business, says Law Society
Shutting up shop: could SRA plans be last straw for some firms?
Solicitors Regulation Authority (SRA) plans to exclude financial institutions from the requirement for compulsory professional indemnity insurance (PII) from next year will drive some conveyancing firms out of business, the Law Society has claimed.
Responding to publication of the SRA’s consultation on PII reform, Law Society president Linda Lee said the proposed change to remove work for all commercial clients from the scope of the minimum terms and conditions of cover from October 2012 would also be short-sighted.
She said: “Conveyancing solicitors would find themselves forced to take out additional insurance – a bitter blow at this point in the economic cycle. The extra cost could be the last straw which drives some solicitors out of business, thus reducing consumer choice.
“The present arrangements provide comprehensive coverage for all solicitors’ clients, without the need to make complex decisions about which commercial clients are too large to need protection and which are not.”
However, she said the society was that the SRA “has heeded its call for an end to the single renewal date for PII from October 2011 so that firms can renew cover at any time of year”.
She reported that “a significant number of solicitors” had told the society that the single renewal date placed additional pressure on insurers and brokers, which encouraged them to prioritise larger firms over smaller ones. “The society also hopes the changes will mean more insurers are encouraged to enter the PII market,” she said.
Meanwhile, figures released by the SRA show that in all 550 firms requested an application form for entry to the assigned risks pool (ARP) this year. As at 24 November 2010, 280 firms were covered by the ARP. An additional 197 firms applied to join but have since advised that they were not taking up the cover. SRA chief executive Antony Townsend said: “We have taken the details of the insurance cover that these firms have secured and are checking the information to ensure that firms are not practising uninsured.”
His report to next week’s meeting of the SRA board also reveals that firms in the ARP which have been categorised as being of a higher risk are all scheduled to have been visited by today (7 December). As part of the SRA’s crackdown on firms in the ARP, they will have snapshot reports completed within 72 hours of visits starting to determine the next course of action.
Tags: assigned risks pool, Law Society, professional indemnity insurance, Solicitors Regulation Authority
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