News releases

185 firms apply for extended cover

A total of 185 law firms have applied to the Solicitors Regulation Authority (SRA) for the extended indemnity period (EIP) of insurance having failed to secure cover by 1 October.

The EIP has been introduced this year as the one of the last raft of changes to financial protection arrangements introduced by the SRA since April 2011. Previously, firms would apply to enter the Assigned Risks Pool (ARP), where the whole profession and all participating insurers covered any liabilities.

The ARP ceased to exist from 1 October, and instead firms receive 90 days further cover from their old insurer while they try to obtain a new policy. If they cannot, then the firm must close at the end of that 90 days as solicitors’ firms cannot operate without professional indemnity insurance.

Of the 185 firms that have applied for the EIP, ten have since secured cover, leaving a total of 175 that are now in the 90-day period. A firm may continue to practise normally for the first 30 days while it attempts to obtain a qualifying insurance policy, but after that, the firm may only work on existing instructions.

Other changes introduced this year are:

  • The single renewal date has been removed for any policy starting on or after 1 October 2013
  • The existing ‘side arrangement’, whereby coverage is provided to uninsured firms that have not applied or are not eligible to enter the ARP, was withdrawn with effect from 1 October 2012, and instead claims arising from such firms will continue to be met by the Compensation Fund
  • As suggested by the Law Society, the Qualifying Insurers List will change its name to the Participating Insurers List. This is to remove any misunderstanding that the insurers involved have undergone any vetting by the SRA

Firms had five working days to inform the SRA if they wished to enter the period, although there are some which may not have yet done so. Any that have failed to notify of their intention to apply for an extension should do so as quickly as possible by emailing, stating who their previous insurer was.

With firms finding insurance all the time, the number of those in the EIP is likely to change on a regular basis before the 90 days ends.

View more information on professional indemnity insurance.

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