Law Society says proposals are “without merit” after the SRA proposed to cut back mandatory professional indemnity insurance
The Law Society has criticised proposals put forward to cut back professional indemnity insurance (PII) for solicitors.
In response to proposed cutbacks on mandatory professional indemnity insurance (PII) submitted by the Solicitors Regulation Authority, The Law Society says the proposals would “radically reduce financial protections for clients and solicitors”.
It also says it does not see any financial benefits to the measures.
Law Society deputy vice-president Simon Davis said: “Clients, employees and solicitors would bear the significantly higher risk, but there is no evidence this would be counterbalanced by lower insurance premiums.
“Solicitors and their clients are protected by copper-bottomed insurance, which is appropriate given the gravity of many of the issues we deal with for businesses and individuals.”
The SRA proposes reducing minimum cover from the current level of £2-3m to between £500,000 and £1m.
Access to the Solicitors Compensation Fund would also be restricted and maximum payments reduced from £2 million to £500,000.
Davis continued: “Insurance brokers say these proposals are unlikely to result in lower premiums, so it’s hard to see how clients could possibly benefit, but it’s easy to see how they might end up paying a very high price for the fall in insurance protection.
“Premiums already reflect levels of risk in the work a firm undertakes, and the cost is front-loaded into the first £500,000 of cover, so the idea that the current system is unfair is without any foundation.
“No other profession in the UK today offers their clients such comprehensive or robust protection. This backstop is key to public trust in solicitors and the legal sector, which in turn underpins the rule of law.”