A potential new professional indemnity insurer has blamed the Solicitors Regulation Authority’s failure to tackle the market’s problems more quickly as the reason it will not be offering cover to law firms this year.
Elite Insurance Company Ltd, best known as a legal expenses insurer, had indicated its willingness to enter the market, but has decided against doing so “solely due to the lack of what Elite sees as essential changes to the assigned risk pool (ARP) and the rules governing policy wording”.
In April, the SRA decided to scrap the ARP from October 2013, prompting anger from the Association of British Insurers (ABI), which wants it abolished this year.
In a statement, Elite said: “The latest cash call by the ARP in the region of £38m has led to an even greater hardening of reinsurance rates in the solicitors’ professional indemnity insurance market. As such, new entrants are finding it extremely difficult to secure adequate reinsurance arrangements thus limiting their capacity to take on volume business and as a result, the profitability and viability of their ventures.
“Furthermore, the issues relating to policy wording are not due to be addressed until 2013.”
Barbara Bock, Elite’s group executive officer, added: “We consider this and the recent status quo of the ARP to be a missed opportunity which would otherwise create a vibrant, sensible and competitive market for all concerned.”
Meanwhile, in a separate move, Elite has become the latest legal expenses insurer to quit the ABI over its support for the Jackson reforms, following the lead of DAS last year. Though general insurers back the reforms, legal expenses insurers are strongly opposed to them, as they are likely to blow a hole through the industry. The ABI has been a strong advocate for Jackson.