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Missed opportunity for reform of solicitors professional indemnity insurance will only worsen market fears warns the ABI

Proposals from the Solicitors Regulation Authority (SRA) to reform the market for solicitors' professional indemnity insurance are inadequate and will only worsen already fragile fears for the future of this market, the ABI warns.

The SRA has failed to understand that the closure of the Assigned Risks Pool needs to this year, and that there must be a move away from the current ‘one size fits all' minimum policy terms and conditions set by the SRA to a more flexible approach, with policies tailored to the risks and requirements of individual firms of solicitors.

Nick Starling, ABI's Director of General Insurance and Health, said today:

"These disappointing proposals are a missed opportunity for the long overdue reform which is so badly needed. Insurers warned the SRA that a failure to make radical change would not only damage the interests of solicitors, but also reduce consumer choice. Persisting with the current situation will make insurance ever harder to find for those smaller firms who most need a policy to cover what they do, not what they don't.

"The proposal to close the Assigned Risks Pool from October 2013 is much too late, and little else has been put forward.

"It is hugely disappointing that they have behaved so timidly considering the advice they received from their advisors, Charles River Associates, last autumn - that immediate and far-reaching change was needed. They have failed to heed the warning."

"The regulator has failed in the past to control both entry to the profession and the behaviour of many of those in it. Insurers have done their best to deliver competitively-priced insurance, but with stricter capital requirements approaching, we needed more from this review. This is a completely missed opportunity by the SRA."

The minimum terms and conditions, imposed on the market by the regulator, allow solicitors to maintain their insurance even when they have failed to pay premiums or when they are found to have lied on proposal forms. They also fail to distinguish between different types of solicitors firm, so every firm, no matter how small, must buy the same policy as a big City law firm. Insurers believe the ability to vary the policy terms is crucial to maintaining a stable and sustainable market.

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Last updated 01/07/2016