Lawyers struggling to secure professional indemnity coverage in light of the pandemic can apply for extra time
The Solicitors Regulation Authority (SRA) has confirmed that lawyers who are struggling to obtain professional indemnity (PI) insurance due to the practical difficulties associated with the ongoing coronavirus pandemic can apply to their insurers for an extension to the 30-day extended policy period (EPP), 60-day cessation period (CP), or both.
In its email newsletter this week, the SRA said that firms may be experiencing trouble in securing PI insurance because of operational issues in the insurance market, for example if they are unable to contact their broker because their operations have been suspended, if key personnel are unable to complete the renewal process because they are ill, in hospital or have caring responsibilities, or some firms may be in the process of getting finance in order to pay for premiums, including potentially accessing the government’s Covid-19 support schemes.
All of these challenges mean that law firms could need more time to arrange PI cover.
If a firm’s insurer agrees to extend the EPP or CP, firms will need to apply to the SRA for a waiver – this will waive rules 2.3, 2.4 and 4.2 of the SRA Indemnity Insurance Rules.
Furthermore, insurers could ask as a condition of any extension that any premium is paid upfront; the SRA explained that firms will need to confirm any payment arrangements, as well as confirm in their waiver application that they have or will make payment to the insurer for any additional premium for the extension.
If an extension cannot be agreed upon, then firms will only have the prescribed periods in which to secure PI insurance. If this cannot be done within the specified period, then the firm must notify the SRA and close their practice.
The SRA believes that only a small number of firms will require these extensions.