The SRA launched another consultation earlier this year which proposed a number of changes to solicitors' Professional Indemnity Insurance (PII).
Following analysis of 10 years’ worth of insurance claims (2004-2014), the SRA suggested that their current approach to PII was ‘too rigid’ and is a barrier to a truly competitive legal services market. Their view is that the cost of insurance is too high, especially for smaller firms or those working in low-risk areas.
Cox Mahon was invited by the SRA to participate in ‘roundtable’ discussions on their consultation. Whilst the amount of data gathered and analysed by the SRA was considerable, we have concerns that there were some significant and important gaps. The SRA did not include insurers who no longer write Solicitors’ PII, including several who are now insolvent. Many of these insurers had targeted the smaller firms and it would be reasonable to assume that these insurers found their portfolios to be adversely affected by claims.
In addition, there was no claims data obtained and analysed from ‘Excess Layer’ insurers; some of whom have experienced losses and have also withdrawn from the market.
In our opinion, the claims data from both these sets of insurers would provide crucial information for the purpose of this recent consultation. We, therefore, have concerns that the consultation's findings and recommendations will be based on an incomplete picture.
Aside from the concerns we have on the data set used, we remain sceptical as to whether any changes that are implemented by the SRA will result in a meaningful reduction in the cost of cover for the majority of firms.
Watch this space to see if the Legal Services Board (LSB) will again block this second attempt by the SRA to implement changes to the Solicitors’ PII market…
If you wish to be kept up to date on the SRA’s Consultation on Solicitors’ Professional Indemnity Insurance or other legal topics, make sure you receive our dedicated e-newsletter for Solicitors.
Let us know your details using the online form at: www.coxmahon.com/privacy-form