Insurance: Review after five years of the open market
The Council for Licensed Conveyancers (CLC) has announced a review of its professional indemnity insurance arrangements in light of a hardening market for cover.
In 2016, the CLC moved from a master policy to the open market, underpinned by a participating insurers agreement (PIA), and it said this has achieved the principal aim of introducing competition.
But, in a call for evidence [1] about the operation of the PIA ahead of a consultation later this year, the regulator said the hardening insurance market “has placed strain onto the entire system”.
It explained: “Over recent years we have seen examples of firms being refused cover because of work carried out in the past even if any notified circumstances do not proceed or they no longer undertake that type of work.
“In such instances, insurers seem happier to shoulder the risk in run-off rather than continue to work with an ongoing business.
“We expect that these difficulties will pass and that the market will return to a more stable and sustainable level to the benefit of the public and consumer interest.”
The CLC said some new firms and those transferring from the Solicitors Regulation Authority have found it difficult to secure quotes “in a timely way”.
It added: “This has even been the case when firms moving between regulators are not changing the services they provide, nor their personnel or business model.
“This could be stifling innovation and diversity of provision and so reducing consumer choice.”
This represented a “quasi-regulatory barrier” to market entry and participation given that cover was mandatory.
The PIA provides for a minimum level of cover of £2m for every claim and integrates run-off cover for closing firms so that no premium is payable at the point of closure, with an aggregate of £2m cover for the six-year period.