SRA is consulting on plans to reduce minimum cover
Insurance brokers have warned solicitors not to expect lower professional indemnity insurance premiums even if the rules on minimum cover are changed, the Law Society Gazette reports.
The Solicitors Regulation Authority is consulting on plans to reduce minimum cover for small firms to £500,000 and reduce run-off to three years.
The SRA said the proposals would encourage more insurers to join the market and reduce the cost of insurance in the long term.
But brokers have warned that ending the consultation in June, when most firms are due to renew their insurance in October, has created uncertainty and is unlikely to reduce rates.
‘The combined pot of premiums is, by and large, insufficient to cover the costs of the collective claims and defence costs incurred when defending the profession against negligence claims,’ said John Wooldridge, director of PII broker Howden Windsor.
Wooldridge said most insurers’ exposure was for the first £500,000 of coverage, so reducing the limit of mandatory cover would be unlikely to reduce premiums significantly.