Current indemnity rules
Professional indemnity provisions in effect from 1 April 2015
As of 1 October 2014, the Legal Services Board (LSB) had not approved the SRA Indemnity Insurance Rules ; consequently, new rules did not come into effect on 1 October 2014. So the SRA Indemnity Insurance Rules 2013 and associated minimum terms and conditions continued to apply to the indemnity period commencing 1 October 2014, until such time as new rules are approved. On 9 February 2015 the LSB approved amendment rules that will amend the following parts of the SRA Handbook with effect from 1 April 2015:
- SRA Code of Conduct 2011;
- SRA Indemnity Insurance Rules 2013 including Appendix 1 (Minimum Terms and Conditions (MTC); and
- SRA Handbook Glossary 2012.
Summary of changes in effect from 1 April 2015
The changes to the SRA Indemnity Insurance Rules, the MTC and the Glossary only affect policies of qualifying insurance commencing on or after 1 April 2015. All these changes have been incorporated in a new version of the Participating Insurer's Agreement 2014 (PDF 61 pages, 707K).
Code of Conduct
A new Outcome has been introduced into the SRA Code of Conduct 2011 as follows:
O(7.13) you assess and purchase the level of professional indemnity insurance cover that is appropriate for your current and past practice, taking into account potential levels of claim by your clients and others and any alternative arrangements you or your client may make.
We expect firms to be compliant with this obligation by the earlier of:
- the date on or after 1 April 2015 of the commencement, renewal, replacement or agreed extension of the policy period of any qualifying insurance; and
- the start of the new indemnity period on 1 October 2015.
Minimum Terms and Conditions
Variation of multi-year policies – there are changes to the provisions relating to variation of multi-year policies. All policies incepting on or after 1 April 2015 are required to be updated to reflect any amendments made to the Minimum Terms and Conditions, the SRA Indemnity Insurance Rules and the Glossary. Such amendment to occur on the next inception, renewal replacement or extension of a policy or 18 months after the date of the last required amendment or commencement of the policy. This requirement does not apply where the date on which amendment would have been required falls within the Extended Indemnity Period or the Cessation Period (see clauses 4.11 and 4.12 of the MTC).
Run-off provisions – the run-off cover provisions in the MTC are expanded to clarify that run-off cover is to be provided on a cessation (whether during the policy period, the extended indemnity period or the cessation period) and from the expiration of the cessation period (even where the firm has not yet ceased to practice). In this latter scenario, the cover does not extend to acts or omission of the insured firm that arise after the expiration of the cessation period. Liability for such acts will be a matter for the SRA Compensation Fund (see clauses 5.4 and 5.5 of the MTC).
Sanctions exclusion – A new sanctions exclusion operates so that there is deemed to be no cover, and the Participating Insurer will not be liable to pay out a claim, if the Participating Insurer is prohibited from paying out such a claim or providing such insurance by reason of: (i) economic sanction, or (ii) trade sanction law, of the UN, EU or USA (see clause 6.11).
In the SRA Handbook Glossary 2012 the definitions of "authorised insurer" and "transaction" have been amended, the definitions of "cessation", "qualifying insurance" and "sum insured" have been replaced and the definition of "run-off firm" has been deleted.
Summary of changes in effect from 1 October 2014
No changes to the SRA Indemnity Insurance Rules or minimum terms and conditions came into effect on 1 October 2014.