ABI says commercial insurance market suffers from intervention

The Association of British Insurers recently said that the commercial insurance market should not have to suffer regulating the solicitors profession because of insufficient regulatory intervention.

Matthew Young, a policy adviser for the ABI, recently expressed his frustration with the assigned risks pool’s failures at a recent panel debate.  The ARP, a professional indemnity insurer of the last resort for solicitor firms which cannot secure cover through conventional means, will be scrapped by the Solicitors Regulation Authority from October of 2013. The ARP is already facing shortfalls in regards to available premium to pay business liability insurance claims for the 2011-2012 financial year.

The ARP is scheduled to be replaced in 2013 with a new system wherein business insurance providers will be required to offer an extended policy period of three months to firms who experience an inability to secure cover.  Mr Young pointed out at the panel, which was hosted at Lloyd’s by Greenwoods Solicitors, that the insurance industry had been effectively providing ‘de facto’ regulation through pinpointing firms that were unfit for cover.

The policy adviser was critical of the SRA in its failure to efficiently handle regulation.  He commented that there needs to be a closer look taken at why there was a failure in regards to the ARP, stating that it was was a poor substitute for regulatory activity on the part of the authority.

Insurers had to step in to make decisions on behalf of the regulator, said Mr Young, as it neglected to step in to point out firms that lacked the necessary skills.

Law Society regulation head Elliot Vigar remarked at the panel debate that the ABI made a valid point.  Mr Vigar also said that it is not unreasonable to believe that regulators should be the ones regulating, leaving the insurers to handle the business of providing cover to solicitor firms.

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