The Solicitors Regulation Authority has been warned by insurers that its plans to cut the minimum level of professional indemnity cover will not guarantee that the prices of premiums will come down as expected. In Its wanting to the SRA, the Association of British Insurers has said that its members have informed it that there is insufficient evidence to back up the objective set out by the Solicitors Regulation Authority.

The SRA has previously stated that it wants to bring minimum cover down from £2 million to £500,000 (£1 million for conveyancing firms), and the regulator believes that by making this change it will be about increased competition in the legal services market, thus reducing premiums.

Setback to the Solicitors Regulation Authority

The Solicitors Regulation Authority has made cut-price insurance one of its key selling points, so the Association of British Insurers’ warnings will come as a major setback from the regulator, especially as it failed to introduce similar reforms to professional indemnity insurance back in 2014.

The general insurance policy adviser at the Association of British Insurers, Joe Ahern, said that it’s important that both solicitors and their clients are confident that they have the correct legal and financial protections in place. He added that the SRA’s minimum standards for professional indemnity insurance are currently working with the competitive market, and so the SRA should not over-complicate the system by introducing these indemnity insurance reforms which could expose some customers to unnecessary risks.

The ABI added that the indemnity insurance reforms could result in a small number of consumers without the correct level of access to redress. The ABI has asked the SRA to consider whether this, along with the potential reputational damage to the legal profession is worth the price of lower premiums. The SRA added that any fall in trust in the legal profession could put people off seeking legal help when they need it, which is the complete opposite of what the SRA wants to achieve.

The ABI also warned the SRA that the different proposed limit for conveyancing adds an additional layer of complexity and could result in firms taking out cover which isn’t suitable for them. They concluded by saying that they don’t believe any changes in personal injury insurance requirements would likely lead to a surge in the number of new firms entering the legal services market, bar a few in some niche or specialist areas.

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