153 firms enter Cessation Period
The SRA has announced that a total of 153 solicitors firms have entered the second section of the new Extended Policy Period (EPP), having failed to secure new professional indemnity insurance cover.
The EPP period is split into two parts with the first 30 days called the Extended Indemnity Period (EIP) where firms can carry on as normal.
The second half is called the Cessation Period (CP) where firms can only deal with existing instructions while they seek an insurer.
As we previously reported 226 firms had notified the SRA that they wanted to invoke the 90-day EPP, 72 have since secured insurance.
The 30-day EIP ended at midnight yesterday (30 October), meaning the 153 remaining firms should have entered the CP.
These firms now have until 6 November to notify the SRA and their insurer of their situation.
At the end of the CP on the 29 December, firms without a new policy will have to close.
Previously, firms entered the assigned risks pool (ARP), but this closed on 1 October 2013 (apart from issues involving prior-year obligations and run-off cover).
This was one of the last changes to be made as part of the review of the Client Financial Protection Arrangements designed to ensure the market for professional indemnity insurance remained competitive.
The other final changes made this year were:
– The single renewal date has been removed for any policy starting on or after 1 October 2013
– The ‘side arrangement’, whereby coverage was provided to uninsured firms that had not applied or were not eligible to enter the ARP, was withdrawn with effect from 1 October 2012. Instead claims arising from such firms will be considered by the Compensation Fund
– "Qualifying" Insurers has changed to "Participating" Insurers, to reduce any misunderstanding that the insurers involved have undergone any vetting by the SRA.
Notifications from firms should be made in writing, stating who the firm’s insurer was for 2012/13, to [email protected] Further information on professional indemnity insurance can be found at www.sra.org.uk/indemnity