The Solicitors Regulation Authority has recently confirmed changes will be made to the professional indemnity insurance market by overhauling the Assigned Risks Pool, the professional liability insurance provider of last resort for embattled solicitor firms.
The news from the SRA comes after it launched a consultation into financial protection arrangements for clients in December of 2010.
The ARP will be modified from October of this year by limiting the amount of time a firm may remain under its auspices. For those firms that find it impossible to secure business liability insurance, the amount of time permitted to be covered under the ARP will be reduced to six months from its current twelve month limit. Moreover the ARP will be jointly funded by both the solicitor profession and qualifying insurers from October of next year.
The regulatory body also staetd that the ARP will be dismantled in October of 2013 and replaced with a new system. Under the new programme, insurers will find it compulsory to offer extended policy periods of three months to any firm who finds it impossible to obtain professional indemnity insurance for the coming year.
The SRA stated that this new scheme had similarities to arrangements that had been proposed by the Law Society in its own consultation response, adding that in order to facilitate the transition, the single renewal date will be kept in place until October of 2013.
Richard Collins, the SRA’s director of standards, remarked that only after extensive consideration of the consultation responses the regulatory body received were arrangements revised. The SRA received input from stakeholders in the form of constructive criticism as well, he added.