A total of 185 law firms have applied to the Solicitors Regulation Authority (SRA) for the extended indemnity period (EIP) of insurance, having failed to secure cover by 1 October.
The number – nearly treble the 69 firms that had applied for the EIP in the first three days after the renewal deadline – may yet be increased by firms that were not aware that they are required under SRA rules to notify the regulator within five days.
One leading professional indemnity insurance broker told Legal Futures that others have deliberately chosen not to tell the SRA.
Nonetheless, the figure remains far lower than some of the predictions that as many as 1,000 small law firms could fail to find insurance in the wake of the problems with Balva and Berliner.
The SRA said 10 of the firms have already found cover.
Under the new PII regime, firms that were unable to obtain qualifying insurance by 30 September receive 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.