News

SRA To Push Again For Changes to PII Minimum Terms & Conditions?

By Richard Gledhill
01.06.17
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This month, a brief nod to The Law Society’s response to the regulator’s own publication ‘Reflecting on Solicitors Professional Indemnity Insurance (PII): market trends and analysis of historical claims data (October 2016)’.

It would appear that the SRA may be minded to once again seek to reduce the minimum level of cover required (an attempt to reduce the minimum level of cover from £2M to £500,000 was rejected by the Legal Services Board in 2014) and in doing so, may bring a consultation this year.

For our part, as specialist PII Brokers within the legal sector, we do not feel the profession would be best served by such a change. To reiterate just some of the points we made previously:

  • The SRA’s own figures point to the fact that 98% of claims settled for less than £580,000, and in all likelihood, there would, therefore, be little saving in insurance premium terms on the primary cover. Indeed, there is the danger that Top-Up insurance premiums could significantly increase should the market be required to participate in excess of such a low primary limit.
  • The creation of a gap in consumer protection wherein come cases an inadequate level of cover might be purchased. Even if no gap in consumer protection, where does this leave the practice if having to fund the gap?
  • Would the smaller firm which buys a low level of cover find that their clients simply move their business to the larger firms who maintain a greater level of protection?
  • In a similar vein, we imagine great difficulties for conveyancing firms remaining on lender panels if maintaining low levels of cover.

In summary, MFL Professional would concur with the Law Society’s own response in that any reduction in the minimum cover would lead to:

  • An increased risk exposure to both legal practices and their clients.
  • A possibility that premiums for Top-Up cover would actually increase, in some cases negating any saving on the Primary cover.

The PII Market 2017 continued…

Following on from the points made above, the calendar year to date has seen continued reductions in Insurers’ rates for Solicitors PII cover for those firms that might have enjoyed a recent good claims experience. We are aware of further new Insurer entrants to the market so see no reason at present why this trend will not continue at least for a while yet.

We would add here that such rate reductions are now also being applied to conveyancing work albeit where the firm can evidence a good claims record.

MFL Professional – Services to Solicitors

We look to provide a comprehensive advice led service to firms in order to provide a comprehensive package of covers ensuring full professional liability protection.

  • Professional Indemnity Insurance – Solicitors’ MTC at competitive pricing, in-house claims handling assistance and risk management advice on areas such as succession, complemented by;
  • Crime Insurance – Protection in relation to fraudulent or dishonest actions of employees or third parties which result in your financial losses, dovetailing as appropriate with the cover afforded under your PII.
  • Cyber Insurance – Third and First party costs of dealing with a cyber attack including a Hackers’ fraudulent use of information, Data Breach Notification costs, Restoration of Communication Assets, Regulatory Defence & Penalty costs, Forensic Investigation costs, Business Interruption etc.
  • Management Liability – Personal and other liabilities which arise from running the legal practice, including cover for COLPs, COFAs, MLROs, allegations of wrongful acts, Investigations into the practice affairs (e.g. by Forensic Investigation Unit of SRA) etc.

Download your copy of “SRA To Push Again For Changes to PII Minimum Terms & Conditions?”

If you wish to discuss any aspect of this article in greater detail or require assistance in sourcing an appropriate level of cover at a competitive price, please do not hesitate to contact ourselves as below.

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