Predictions of a professional indemnity insurance apocalypse appear to have been well wide of the mark, with just 69 firms so far notifying the Solicitors Regulation Authority (SRA) that they have triggered the new extended indemnity period (EIP).
Of these, two have already found insurance, an SRA spokesman said today – although the figures remain a moveable feast.
Under rule 17.3 of the SRA Indemnity Insurance Rules, a firm entering the EIP must notify the regulator and its existing insurer “as soon as reasonably practicable” and in any event no later than five business days – giving firms until next Monday.
The experience of the assigned risks pool in previous years and other exercises – such as compliance officer nomination – also shows that large numbers of firms regularly miss SRA deadlines.
Under the new PII regime, firms that were unable to obtain qualifying insurance by 30 September received a 90-day policy extension from their previous insurer. This extension is in the form of the EIP and the cessation period (CP).
The EIP is a period of 30 days in which a firm can continue to practise and try to obtain qualifying insurance. If successful, the new insurer must backdate the policy to the start of the EIP.
If not, firms will enter a cessation period of 60 days in which they will be unable to accept new instructions and can only perform work in connection with existing instructions.
If firms are unable to obtain insurance outside of the EIP or cessation period, then they will have to cease practice and their insurer will be required to provide them with the mandatory six years run-off cover. The run-off cover will be deemed to have commenced from the start of the EIP.