Law firms cautioned to prepare for the PI insurance revolution

While all law firms will need to be prepared for the coming PI insurance revolution, smaller legal practices have recently been warned abut the need to have firm-specific, transparent information on their risk profiles.

The far-reaching changes to the way solicitor firms will purchase professional liability insurance will significantly effect both small and medium sized firms, experts predict.   All legal practices will need to develop risk management into a core school if they wish to successfully navigate the business liability insurance market in the coming years.

2013 is set to be a watershed year for insurers and solicitor firms as well, as that is the year that the Assigned Risks Pool, the insurer of last resort for the legal profession, will be shuttered.  Firms that are found to be uninsurable will instead remain with their most recent insurer, closing after an extended policy period of 90 days.

The common PI insurance cover renewal date is also being scrapped, as well.  As these new changes rapidly approach, firms will no longer be able to remain in the ARP any longer than six months.

Law firms with positive risk profiles will no longer need to prop up poorly run firms that cannot secure cover on the open market under the new plan.  This is predicted to help reduce a portion of the upward pressure on premium payments, experts say.

Meanwhile, if the 2008 ARP year is to repeat itself for this coming financial year, a full 20 per cent of solicitor premium payments collected by the PI insurance industry will once more end up go into paying for the ARP to operate properly.

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