The ABI warns that the Solicitors Regulatory Authority (SRA) proposals published today on reform of the solicitors’ professional indemnity insurance may not bring about a solid, sustainable market for this cover. The SRA consultation proposes a two-stage introduction of changes, with some to be made in time for the October 2011 renewals, and others to be implemented in 2012 or later.

The ABI welcomes the proposal to exclude financial institutions from the minimum terms, and limiting the time solicitors’ practices can spend in the APR. However, there is concern that some key issues will not be addressed in time for 2011. These include:

• The operation and funding of the Assigned Risks Pool (ARP). It is crucial that the way this is funded is addressed, to give some predictability on future costs, as over the last three years nearly 800 firms have amassed losses of £65 million.
• The ability of insurers to void policies for non-payment of premiums and misrepresentation or non –disclosure.
• Ensuring that run-off provisions in the policy are fair and do not allow the public to be put at risk by allowing incompetent or dishonest solicitors to continue practising.

Nick Starling, the ABI’s Director of General Insurance and Heath, said:

“These proposals need to go further if we are to build a stable and sustainable market for solicitors’ indemnity insurance. With the market facing its third major crisis in the last twenty five years, the regulator must grasp this opportunity and act decisively to deliver much-needed reforms that will encourage insurers back into this market.
“In the coming months we will be discussing these proposals with the SRA and our members to push for effective action to bring greater certainty and stability to this market for insurers and solicitors alike.”

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Notes

Notes for Editors

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2. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.
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Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £155 million in benefits to pensioners and long-term savers as well as £58 million in general insurance claims.

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