Solicitors Regulation Authority will force high risk law firms to improve or close down
Insurers will save millions after an edict from the Solicitors Regulation Authority (SRA) that law firms pay their professional indemnity premiums or face closure.
The authority is telling all firms that have been in the assigned risks pool (ARP) for nearly two years to get insurance by October or face an orderly wind-down.
Since 2000, insurers have had to pick up the £9.2m bill for unpaid ARP premiums, with default rates at 49%. Last year, there was a record £4.8m in unpaid premiums.
SRA chief executive Antony Townsend said: “The tough enforcement strategy that the authority’s board has approved is designed to ensure that firms stay in the ARP for as short a period as possible; that firms that pose a high risk are rectified or closed down; and that firms that fail to pay their premiums face credible deterrents, including prompt closure.”
Clear Insurance’s Daniel Innes said: “It’s a good idea. You can’t keep having firms that don’t pay premiums funded by insurers, because that will eventually be funded by the solicitors themselves through higher premiums. The ARP call for this year will be massive.”