Regulator extends call for evidence on PII
The Council for Licensed Conveyancers (CLC) has extended the deadline for its call for evidence on the operation of its Participating Insurers Agreement (PIA), to help shape a formal consultation later this year, to 31 August 2021.
The CLC introduced its Participating Insurers Agreement in 2016, allowing CLC regulated practices to seek cover from any insurer that is part of the scheme. It sets out a minimum level of cover of £2 million for each and every claim.
It also integrates run-off cover for closing firms so that no premium is payable at the point of closure, with cover for the six-year period of £2 million in aggregate. Integrated run-off provides certainty for all concerned – insurers, practices and their clients – by guaranteeing that run-off cover will be in place should the practice close.
Since its introduction, however, the market for insurance has hardened and the delivery of legal services, particularly in conveyancing and probate, has been evolving rapidly. So, it is timely to consider whether changes might be appropriate.
Call for evidence
The CLC is now asking insurers, regulated practices, consumers and their representatives, and others for views on the operation of the PIA and Minimum Terms and Conditions to ensure that they are fit for purpose for the next five years.
The CLC is seeking evidence on the need for change or potential improvements in relation to any aspect of the PII arrangements. This will pave the way for a formal consultation on proposed changes later in 2021, with a view to any new arrangements being in place in time for the next PII renewal deadline on 1 July 2022.
CLC is happy to receive evidence on any point but are especially interested in exploring views on the following questions:
- Since the current scheme was introduced in 2016, has this been a profitable market in which insurers wish to participate?
- How have insurers priced the risk of run-off into policies?
- Are there alternatives to integrated run-off cover that offer the same certainty around consumer protection?
- Have you priced the risk of policies for practices who only undertake wills and probate work, separately to those practices who undertake conveyancing work?
- How could the regulator and insurers work more closely together to identify and manage down risk?
- Are there adjustments to the CLC’s PII scheme that would make it easier for new practices to secure prompt quotations and agree cover?
- Is the £2million aggregate limit for run-off still appropriate?
- How could barriers to market entry and participation be lowered where the regulator is content with the proposal for a new practice or the continuation of an existing one?
- How can we facilitate a smoother process for transfer of practices from one regulator to another?
- Following clarification of cover of cyber-related losses, currently the subject of a separate consultation, should the CLC take additional steps to secure consumer protection as digitisation of legal services speeds up?
Sheila Kumar, Chief Executive of the CLC, explains:
“As a result of market pressures over recent years we have seen examples of firms being refused cover because of work carried out in the past even if any notified circumstances do not proceed or they no longer undertake that type of work. In such instances, insurers seem happier to shoulder the risk in run-off rather than continue to work with an ongoing business.
“Another issue is that new and transferring firms have found it difficult to secure quotes in a timely way from participating insurers. This could be stifling innovation and diversity of provision and so reducing consumer choice. It adds a quasi-regulatory barrier to market entry and participation that is not guided by the regulatory framework intended to promote the public and consumer interest.”