The Solicitors Regulation Authority has been feeling the heat recently in regards to the way the solicitors’ professional indemnity market handled as the renewal date of October 1 looms ever closer on the calendar.
The SRA, the entity responsible for regulating the professional liability insurance market, has faced harsh criticism for its failure to curtail increases in insurance rates, since it failed in its efforts of industry reform, but in light of the impending arrival of new capacity in the market, industry insiders are wondering if the SRA was in the right to stick to its guns after all.
There have been no doubts expressed whatsoever in regards to the business liability insurance renewals this year will be even tougher than they’ve been in the past.
The entire solicitor’s PI insurance sector was sent into alarm when the Irish Financial Regulator decided to place Quinn insurance into administration this past march; Quinn, which had a reputation for providing cover for firms that had no recourse, underwrote policies for nearly 3,000 smaller-sized firms.
Quinn’s reputation for undercutting its rivals, however, was an aid in regulating how many firms had to avail themselves of the last-resort cover of the assigned risks pool, and was able to keep ARP’s proportions in line with the industry at large.
With Quinn’s departure from the market, many industry experts voiced concern that ARP would become glutted with new firms, something the insurance market had been cautioning about for an extended period of time.
All public liability insurance providers pay into the ARP, which means that the market will essentially always cover any firms that cannot procure cover elsewhere, but the higher the number of firms utilising the ARP, the more insurers must contribute financially in order to ensure coverage.
To date, estimates have been made that the ARP, since its creation 10 years ago, has been paid into to the tune of £50 million by industry insurers.