Ben Parks from BLM's Professional Indemnity team examined the proposed changes by the Solicitors' Regulation Authority’s (SRA) to the indemnity insurance rules almost all of which are regarded as misguided by the insurance industry. That said there is some relief the SRA does not intend to make any changes to how the responsibility for paying claims is determined.
After four years and four major public consultations, the SRA has finally outlined its extensive programme to reform the legal services sector in England and Wales.
The intention is to give solicitors and law firms greater flexibility over how they operate and to make it easier for the general public to acccess legal services. These changes include the transformation of the legal indemnity insurance rules, which is designed to end the existing "one-size-fits-all" rules for solicitor's professional indeminity insurance.
Ben said in a sector where making a profit has been a struggle for many insurers, insurers are unlikely to want the open-ended exposure that an "events occurring" policy would bring. "While recent SRA statistics show the majority of claims are brought within three years after the event, 10% were brought between six and 15 years and, amazingly, 1% of claims were brought 25 years after the event."
To read the full article, please click here where you will be redirected to Insurance Day's website (subscription required).