The Solicitors’ Regulation Authority has recently addressed critics in the professional indemnity insurance market by declaring that the new reforms instituted to the Assigned Risks Pool are working as intended.
The ARP, which is the professional liability insurance provider of last resort for the solicitor market, has seen 82 of its covered firms close down in the 2009-2010 financial year. However, 48 ARP covered firms went on to leave the ARP and obtain commercial insurance from a different provider; the 2010-2011 year has already seen 46 ARP firms shutter its doors.
In an effort to allay the fears raised by critics regarding the sums of unpaid premiums by firms using the ARP, the SRA declared that the fund manager for the Pool is pursuing these payments in a more active manner in order to ensure policy providers were paid. A total of 126 ARP solicitor firms are currently facing regulatory action for non-payment from the regulatory body, and so far ten firms have been formal disciplinary hearings.
The SRA has also said that it was redoubling its efforts and devoting greater resources into aiding firms in managing their way out from under the ARP’s umbrella. The number of firms visited under this strategy in the 20010-2011 year so far – a total of 181 – is nearly double that of those visited the previous year, at 96 firms.
The regulatory agency additionally maintained that critics have been proven wrong regarding claims that the new ARP reforms would adversely impact on firms owned by black and minority ethnic groups. 2009-2010 data demonstrates that a proportionately larger number of firms owned by white majorities closed either through orderly wind down or through intervention than BME majority-owned legal firms.