Chartis issues response to SRA’s new PI insurance decision

One commercial insurance provider has issued a response to the decision by the Solicitors’ Regulation Authority to dismantle the Assigned Risks Pool by 2013.

Business insurance specialist Chartis has expressed disappointment to the announcement that the SRA will be scrapping the ARP, the provider of last resort for solicitor firms unable to secure professional indemnity insurance.  Chartis stated that the SRA has disregarded the majority of the consultation responses the insurance industry has given them and that the major structural changes that will be needed to be made to the framework that allows interaction between solicitors and their insurers have once more been delayed.

Chartis holds the largest market share of the primary solicitors’ market in England and Wales.  The insurer believes that before the 2011 renewal season begins on 1 October, the ARP is in need of a fundamental overhaul.

According to projections made by the insurer, insurers have seen the costs of funding the ARP rise to exceed £100 million between the years of 2005 and 2009. Chartis has no expectation that these exorbitant costs will undergo any reduction in light of the challenges the legal sector’s smaller firms are facing.  Chartis actually expects the number of firms that need to make use of the ARP to grow.

Insurance providers do not have the ability to bear continued unknown levels of risk from law practices that they chose not to trade with, added Chartis.  The insurer instead feels that a fresh approach to professional indemnity insurance is needed – and that approach has no home for the ARP.

Chartis concluded by stating that insurance providers should only be held liable for the risk exposures they choose to write, with the final run off of six years sitting firmly with the final commercial insurer.

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