Twenty-eight firms joined so far this year
Twenty-eight law firms have applied to join the assigned risks pool (ARP) since the solicitors’ professional indemnity (PI) insurance deadline of 1 October, according to the Solicitors Regulation Authority (SRA).
Last year 53 law firms applied to join the ARP, and in 2010 411 applied.
The ARP provides PI insurance for law firms that cannot get cover on the open market. However, the pool will be scrapped after this year’s renewal.
In October 2013, the ARP will be replaced with a system where insurers offer a three-month extended policy to law firms which cannot obtain PI for the following year.
A firm may continue to practise while attempting to obtain a policy for the first 30 days of this extended indemnity period.
For another 60 days, firms may only work on existing instructions while attempting to find insurance, or will have to close if they cannot get cover.
The SRA decided to change the way solicitors’ PI is run in April 2013 after it found that the cost of funding the ARP had risen year on year.
SRA executive director for policy Richard Collins said: “It was clear that to ensure the long-term sustainability of the PII arrangements that one of our biggest challenges would be to address the ARP. Doing this was complex, but we believe the arrangements approved and being implemented offer the best way of ensuring client protection through a competitive insurance market.”