No reason to delay October 2014 renewal for solicitors
This is traditionally a busy time of year for insurers, brokers and law firms in the run up to the 1 October deadline for securing professional indemnity insurance cover.
I think that this year is going to see an even busier final month because many of the 10,000 or so law firms seeking cover had until now been holding off while the SRA confirms its position on minimum cover.
Earlier in the year the SRA had announced its proposal to reduce the compulsory minimum cover to £500,000 from £2,000,000 (£3,000,000 for incorporated practices). The SRA had hoped that this would have been signed off by the LSB in time for this year's renewal process, and many law firms held fire on securing their insurance until the change was official. For many firms, the reduction to £500,000 would have meant an individually tailored assessment of the appropriate level of cover.
The LSB, however, threw a spanner in the works, and on 18 August issued a formal notice warning that it was considering whether to refuse the SRA's application to change the minimum level. The LSB observed that the proposed reduction to £500,000 "could be argued to be prejudicial to the regulatory objective of protecting and promoting the interests of consumers" and requested further information from the SRA. Such uncertainty at the key period of the indemnity process was unsatisfactory, and in response the SRA has now confirmed that any changes to the level of minimum cover will definitely not take place until after October 2014. For now the 2013 SRA Indemnity Insurance Rules remain in place.
I expect that the next few weeks will see increased activity for the many insurers, brokers and law firms who had delayed finalising their arrangements. Charles Plant of the SRA Board expressed his disappointment at the delay caused by the LSB's warning notice, although confirmed that the SRA was "continuing to develop our proposals on this issue." Let's hope that this is all done in good time before October 2015 to avoid another bout of last minute uncertainty.