The Solicitors Regulation Authority (SRA) is planning new PII rules for the 1 October 2014 renewal. The new rules, which were approved by the SRA board on 2 July, will reduce the minimum level of cover to £500,000 from £2 million.
The SRA says its proposals are intended to “ensure that regulation is properly targeted and proportionate for all solicitors and regulated businesses, particularly small businesses.” However, its plans attracted criticism from some in the profession. The City of London Law Society is concerned that the reduction in minimum cover to £500,000 may “increase significantly the incidence of uninsured claims and undermine confidence in the profession.”
Former Law Society president Linda Lee warned that the plans could create a ‘sub-class’ of firms that could not afford anything but the minimum cover and would be shunned by clients.Russell Lane, Managing Director of Brunel Professional Risks welcomes the proposals, but is concerned that they do not go far enough. “Reducing the minimum level of cover could help many firms to secure cover, but the SRA could have gone much further to make the insurance market more competitive. For example if the fraud risk terms were amended or insurers were allowed to void the policy for non-disclosure or non-payment of premium, many more rated insurers would enter the market. This would be the quickest way to offer more rated capacity and stable, affordable premiums for solicitors.”
James Page, Associate Director, Brunel Professional Risks says solicitors should start the renewal process as early as possible. “It will not be clear until nearer the renewal date what impact these changes will have on the market. It is important, however, that solicitors are ready, well in advance. Insurers want to insure the best managed firms, with clear risk management procedures. Taking the time now to prepare carefully thought through proposals will put firms in the best possible position to secure competitive rates when the renewal starts.”