SRA Proposals to reduce minimum PII cover receives criticism
The Association of British Insurers (ABI) have expressed concern over the Solicitors Regulation Authority (SRA) proposals to reduce the minimum level of professional indemnity insurance (PII).
The regulator wants to reduce the minimum PII cover from £2m to £500,000 (and to £1m for conveyancing firms) and believe competition in the legal market will grow and reduce insurance premiums.
The ABI has warned there is no assurance that premiums will come down if the SRA continue with their plans to cut the minimum level of professional indemnity cover. Plus, the ABI’s members have advised that there is a lack of evidence to back up any of the SRA’s main reasons for pushing ahead with their proposals.
The ABI’s criticisms will be a disappointment to the regulator and a further setback, as a reduction in insurance is viewed as one of their key selling points.
Joe Ahern, the general insurance policy adviser at the ABI, commented: ‘It’s important both solicitors and their customers can be confident they have the right legal and financial protections in place.
‘The minimum standards for professional indemnity insurance set out by the SRA at the moment are working well as part of a competitive market. We are urging the SRA not to over-complicate the system and expose some customers to unnecessary risk by reducing these mandatory limits.’
The ABI is concerned that the reduction in minimum limit may leave some of the consumers without proper access to compensation. With both this and the potential damage to the reputation of the legal sector in mind, ABI wonders whether it is worth the risk to ultimately gain lower premium costs. Furthermore, the SRA have admitted they recognise that their proposals could make consumers mistrust the profession which is the opposite of what they want to achieve.
The ABI feel the difference of the proposed limit for conveyancing adds another layer of difficulty as it may lead to firms taking out inappropriate cover. With regards to greater consumer choice, the ABI advises the market was already highly competitive in both family and conveyancing sectors.
The ABI further added: ‘We do not anticipate that any changes in PII requirements would result in a surge in new firms entering the legal services market, save for possibly in a few niche or specialist areas.’