Just 53 law firms have failed to find professional indemnity insurance and so entered the assigned risks pool (ARP), provisional figures have shown.
At the same stage last year, 409 firms had entered the ARP. Firms still have a month in which they can find secure insurance and backdate it to 1 October.
From this year, firms will only be able to spend six months in the ARP before either securing open market cover or an orderly wind-down; previously it was a year, and before that two years.
The SRA has also engaged in a more active enforcement policy over firms in the ARP in recent months, including pursuing the many who do not pay the punitive premiums charged to be in it.
The relatively small number of firms should substantially reduce the burden of the ARP on the profession, which is funded by all the qualifying insurers by reference to their share of the market for the compulsory layer of cover. The SRA has also taken steps this year to stop some insurers restructuring firms’ cover so that they can reduce their exposure to the ARP.
SRA chief executive Antony Townsend said: “The SRA board approved key changes to the arrangements for client financial protection in April this year. In the consultation process on this subject, it became clear that one of the biggest challenges facing us was the need to manage down the numbers of firms in the ARP. These figures demonstrate that our programme of reforms is having the intended effect.
“We continue to monitor the effect of these changes not only upon firms in the ARP, but also small firms who are particularly vulnerable to increases in insurance premiums.”
From next October, the ARP will be funded jointly by qualifying insurers and the profession, with liability for claims arising from firms who have not taken out insurance moving from the ARP to the Compensation Fund. The ARP will be replaced in October 2013 with a system where insurers offer a three-month extended policy period to firms who cannot obtain professional indemnity insurance for the following year. The single renewal date will be maintained until October 2013 to facilitate the transition.