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Daily Insurance Industry News
Sunday 21st of January 2018
October 28, 2010

“Overdue and urgent changes” for solicitors PI insurance

by Gill Montia

Story link: “Overdue and urgent changes” for solicitors PI insurance

The Association of British Insurers (ABI) has welcomed the publication of a report on the need for changes to the solicitors’ professional indemnity (PI) insurance market.

The report, by Charles Rivers Associates, commissioned by the Solicitors’ Regulatory Authority (SRA), claims that the move to an open market for solicitors PI insurance a decade ago has since saved the profession £2.1 billion in premiums.

The ABI also backs the following recommendations in the report:

The minimum terms of the policy, as required by the SRA, must allow insurers to set premiums that more accurately reflect the risks of work carried out.

The funding of the Assigned Risks Pool (ARP), which is for solicitors unable to get PI cover, needs to change to provide more incentives for the profession to deal with the small number of poorly run firms, by transferring the costs of the ARP more explicitly to the profession.

As with other types of insurance, insurers should be able to cancel a policy if a solicitor fails to pay the premiums. (At present insurers cannot do this, so firms in difficulty find it easier to stay in business.)

The single common renewal date should be scrapped.

The ABI’s assistant director of markets and regulation, Kate Carr, sums up: “This market cannot tolerate periodic crisis, caused by a combination of poorly enforced regulation and restrictive policy requirements, such as insurers’ requirement to stay on cover when premiums are not maintained.”

She adds: “We hope this report will spur the legal profession into working with us to ensure that these overdue and urgent changes can be introduced to bring stability and sustainability back to this market.”

 

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