Citing issues with the rules governing the assigned risks pool, one legal expenses provider has recently announced it will not be entering into the market for solicitors’ professional indemnity insurance.
Business insurance specialists Elite Insurance Company recently remarked that the company had made the decision completely because of the lack of what Elite saw as essential changes to the ARP, which is the professional liability insurance provider of last resort for the solicitor sector. Elite also cited rules that govern the wording of policies as an additional reason for its decision as well.
Elite commented that reinsurance rates have hardened even more within the solicitors’ professional indemnity insurance market due to the ARP’s latest £38 million cash call. Those firms looking to newly enter the market are encountering extreme hardship whilst attempting to secure proper reinsurance arrangements, which limits the capacity of these firms to take on business in sufficient volume to remain both viable and profitable in their ventures, added the insurer, while policy wording issues (not due to be addressed until 2013) also played a role in adding difficulty to new firms.
Elite Insurance’s group executive officer, Barbara Bock, also commented by saying that the firm considers this – plus the recent ARP status quo – to be missed opportunities that could have otherwise led to the creation of a competitive, sensible, and vibrant market for all firms involved.
Scheduled to be dismantled in 2013, the ARP will be replaced with a brand-new system designed to require insurers to offer extended policy periods of three months to solicitor firms who encounter difficulties securing proper cover. The ARP has been criticised in the past for being a poor substitute for regulation by the Solicitors’ Regulatory Authority.