According to recent comments from the Solicitors’ Regulation Authority, indemnity insurance payments made by legal firms on their professional liability insurance policies have increased by 20 per cent for the 2011-2012 financial year.
More than 10,900 Welsh and English legal practices pay for business liability insurance on an annual basis, and this year premium prices amounted to the sum of £256 million. This represented a significant increase in comparison to the figures for the 2010-2011 financial year, which amounted to £214 million in premium payments.
The increase in premiums comes hot on the heels of the Assigned Risks Pool reducing the number of firms it provides cover for by a remarkable figure. Only 32 solicitor firms were allowed to enter the ARP this year when they could not secure indemnity insurance cover from a traditional retailer, out of the 53 that originally applied – with the rest facing winding-down and shuttering, as you cannot do business as a solicitor firm in the UK without the requisite cover.
The SRA has also instituted several other limitations to the ARP, such as reducing the time allowed within it to six months, down from 12. Antony Townsend, SRA chief executive, remarked that the Authority found that it was in desperate need of managing the number of firms that needed to avail themselves of the ARP, as it inhibits competition and places undue burdens on other firms who were able to secure cover.
The new reform programme is certainly having the desired effect, said Mr Townsend, pointing to the new figures regarding the number of firms in the ARP.