There are signs of a softer professional indemnity insurance market for some law firms this year, but underwriters are looking to handle alternative business structures with care, a new report has claimed.
Michelle Garlick, a partner in the professional risk team at Legal Futures Associate Weightmans, considers the changes the SRA is planning to make to the professional indemnity insurance regime and is not surprised that it is not happening as quickly as insurers wanted. But in the meantime they will be reviewing their risk assessments and underwriting criteria very carefully.
The Solicitors Regulation Authority has radically reworked its reforms of professional indemnity insurance, delaying the end of common renewal for two years and kicking the question of compulsory cover for financial institutions into the long grass. Solicitors will also be liable to pay up to £30m of claims arising from the ARP during its final year.
The focus on law firms in the assigned risks pool has led to a significant fall in the number of other monitoring visits conducted by the Solicitors Regulation Authority (SRA), Legal Futures can report. The SRA says the move is an example of its shift towards risk-based regulation.
There are 383 law firms currently in the assigned risks pool, the Solicitors Regulation Authority has revealed. The news comes as the Association of British Insurers (ABI) gave a strong welcome to an independent report on the need for reform of professional indemnity insurance, saying the market can no longer tolerate periodic crises caused by a combination of “poorly enforced regulation and restrictive policy requirements”.