The number of larger professional indemnity claims is increasing, undermining the case for a cut in the minimum cover for law firms from £2m to £500,000, an industry expert has argued in a letter to the Legal Services Board.
The Solicitors Regulation Authority (SRA) has reminded the Legal Services Board (LSB) of its decision to allow accountancy firms wanting to carry out legal work to have minimum indemnity insurance cover of £500,000, in a bid to head off concerns about its move to reduce the level for solicitors.
The Bar Standards Board has followed the Solicitors Regulation Authority and proposed that the advocacy and litigation firms it hopes to regulate later this year should have indemnity cover of at least £500,000.
The Association of British Insurers has joined the chorus of criticism of the Solicitors Regulation Authority’s decision to cut the minimum level of professional indemnity insurance to £500,000. SRA consultees were opposed by nearly 3:1, it has also emerged.
The Solicitors Regulation Authority has decided to go ahead with cutting the minimum compulsory cover for indemnity insurance from £2m to £500,000, despite strong opposition from the Law Society.
The Solicitors Regulation Authority’s proposed indemnity insurance reforms have been attacked from all sides by the legal services consumer panel, the Law Society and the insurance industry itself.
Small firms and sole practitioners could be removed from conveyancing panels if the Solicitors Regulation Authority goes ahead with its indemnity insurance reforms, the Council of Mortgage Lenders (CML) has warned.
Preventing mortgage lenders from claiming on solicitors’ compulsory indemnity insurance will “destroy high street conveyancing”, Law Society chief executive Des Hudson has said, in a wide-ranging speech on the state of the profession.
Yorkshire Building Society has said it has “no present intention” of reconsidering a ban it has decided to impose on firms with unrated indemnity insurers, even though the Solicitors Regulation Authority last week decided against one.
The SRA has acknowledged that the majority of responses received to its consultation on banning unrated indemnity insurers favoured a ban. Of 31 responses, 18 were in favour and 13 against.