SRA announces Assigned Risks Pool strategy

The SRA Board today approved a strategy for the enhanced control of the Assigned Risks Pool, which provides indemnity for solicitors' firms who have failed to obtain insurance in the market.

The main actions approved by the Board today are as follows.

  • By the end of this month (July) all firms in the ARP who are reaching the end of their two-year term will be contacted to ensure that there are robust plans in place for them to leave the ARP by October—either through obtaining market insurance or through orderly wind-down.
  • Also by the end of this month, all firms in the ARP who have not paid their ARP premiums will be contacted and told that they must pay promptly. Firms who fail to do so will face regulatory sanctions and/or will face court action, and/or will be declared ineligible for any further term in the ARP and closed down.
  • In August and September, regulatory action will be pursued in relation to these matters, so that by October as many firms as possible—particularly high-risk firms and those failing to pay their premiums—will have been managed out of the ARP.
  • In October, any firms whose position has not already been resolved will face the likelihood of intervention to close them down.
  • Firms newly entering the ARP in October will be treated in the same way.

Chief Executive Antony Townsend said: "The tough enforcement strategy which the SRA Board has approved is designed to ensure that firms stay in the Assigned Risks Pool for as short a period as possible; that firms which pose a high risk are rectified or closed down; and that firms who fail to pay their premiums face credible deterrents, including prompt closure.

"Compulsory professional indemnity insurance for solicitors' firms is an essential element of the current arrangements to protect consumers of legal services. While it is right that firms experiencing difficulty in obtaining professional indemnity insurance should be given some assistance to do so, it is wrong that firms which are financially unstable or pose a significant risk should be propped up: that poses a danger to consumers, and a burden upon the profession who pay for the Assigned Risks Pool. Neither is acceptable."

To support this programme of action, the SRA will be increasing its capacity for forensic inspection by employing outsourced expertise. Additional funding for these purposes has been discussed with the Law Society.

These measures, coupled with the reforms to the Assigned Risks Pool which the Board made in May, will improve public protection, reduce costs to the profession, and help to sustain a healthy, affordable market for solicitors' professional indemnity insurance.

Work on implementing this strategy will start immediately. In parallel, the SRA will discuss with groups in the profession how best to support firms in the ARP who are able and willing to try to rectify their situation.


  • There were 213 firms in the Assigned Risks Pool on 13 July 2010.
  • The SRA has announced that it is to carry out a "root and branch" review of client financial protection, with a view to introducing the outcomes in time for the renewal on 1 October 2011. The review will be wide-ranging and will include both compulsory professional indemnity arrangements and the Compensation Fund. The SRA will consult closely with the profession, consumer organisations, and the insurers.
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