What do you have to tell your clients about your professional indemnity insurance?
Clause 8(n) of the Regulations requires you to provide to clients:
- the contact details for the insurer that provides the primary layer of compulsory cover that complies with the SRA Minimum Terms and Conditions (MTCs); and
- the territorial coverage of the insurance.
The Regulations provide that the requirement will be satisfied if the information:
- is supplied to your client on your own initiative; or
- is easily accessible to your clients at the firm’s office; or
- is easily accessible electronically from an address supplied by the firm (e.g. website); or
- appears in any information document supplied to the client in which you give a detailed description of your service (e.g. terms of business).
In order to comply with the Regulations many firms post details on their website (often in the “legal notices” section) setting out the name and address of their insurer and simply stating that their policy coverage is worldwide. Others note it in their terms and conditions or letter of engagement. A further approach is to note on either the website or in the terms of business, that the information is available at the firm’s office.
Some firms go beyond the requirement and state their policy number and others disclose their limit of indemnity. This is a matter for each individual firm, but caution is required in relation to the disclosure of your limit of indemnity. Given that professional indemnity insurance is on a “claims made” basis, the limit of indemnity in place at the time a claim is made will not necessarily be the same as it is now. It will also send an inconsistent message if a large limit is disclosed, but letters of engagement routinely seek to limit liability to clients to a much lower amount.
Firms also need to be mindful of Outcome 1.7 in the Code of Conduct 2011 which requires you to “inform clients whether and how the services you provide are regulated and how this affects the protections available to the client”. This provision was prompted by the introduction of Alternative Business Structures which can provide their regulated legal services alongside other services that are not regulated by the SRA. In this instance the firm must tell the client what is and is not regulated and what the consequences are from a client protection perspective.
The publication of PII information has also been the subject of discussion in the SRA’s recent consultation “Look to the future: better information, more choice”. The SRA has proposed that there be a “requirement” for firms to publish on their website the following details:
- that the firm has PII
- confirmation that the cover complies with the MTCs (including the amount of the minimum level of cover)
- the contact details of the insurer(s)
- the territorial coverage of the insurance
This proposal arises out of the SRA’s decision to allow “solicitors” to offer legal services to the public from an entity that is not regulated by the SRA and does not need MTC insurance – or indeed any insurance at all. One of the principal objections to this change is that the public will not understand the difference in protection. The SRA believes that this concern will be alleviated if the firms they regulate publish their insurance details. We expect that the SRA will advise their final decision on this issue in the spring, when they report back on the results of the consultation.
As a final point we remind you of the requirements of clause 18 of the SRA Indemnity Insurance Rules (“the Rules”) in the event that a claim is made or intimated against the firm or any person insured under the firm’s policy. Rule 18 requires the firm and each principal to disclose, upon request, the name of their insurer, the relevant policy number and the address and contact details of the insurer for the purpose of making a claim. Even if you do not consider that a matter has any merit, once a request for the information is made, the Rules require that the information is given. There is no obligation on you to provide any additional information about your cover and we would caution that you do not provide anything further without discussion with your insurer.
If you have any queries about this issue please do not hesitate to contact us.
Legal Services Executive
Professional Indemnity, Howden
020 7133 1300
This article was submitted to be published by Howden UK Group Limited as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.