CLC-regulated firms can now purchase PII cover from insurers that have signed up to the CLC’s Participating Insurers Agreement. That agreement sets out the minimum terms and conditions of PII cover.
These have been enhanced to include run-off cover of £2m at no cost at the point of closure of a practice.
These changes take effect from the beginning of the next PII year, 1st July 2016. Insurers have already been issuing quotations on this new basis in anticipation of the LSB’s approval, which was granted on 14th June.
The new approach
- Ends the master policy scheme with its opt-out provision and moves to a more open-market approach
- Improves consumer protection by ensuring that closed practices will automatically have run off cover in future
- Removes the financial obstacle to orderly closure of firms presented by large run off premiums payable at the point of closure
- Provides firms with improved choice of insurance through a Participating Insurers Agreement
- Reduces the compliance burden on firms by removing the requirement to seek an opt-out from a Master Policy Scheme at PII renewal time
- Streamlines internal regulatory processes at the CLC, making better use of resources
Currently, two brokers have signed up to the Participating Insurers Agreement.
Chief executive of the CLC, Sheila Kumar said: ‘We are delighted that the Legal Services Board has acted so quickly to approve our proposals. This means that firms and their clients will benefit from the new PII policy terms from the point of insurance renewal this month. Any firms that have not yet submitted proposal forms should do so without delay.’