Assigned risks pool to remain open
The Solicitors Regulation Authority has agreed ‘in principle’ to scrap its plans to close the assigned risks pool (ARP), but will tighten the rules on eligibility and how long firms can stay in the pool.
The SRA said the decision to retain the ARP, the insurer of last resort for firms unable to obtain professional indemnity insurance on the open market, is conditional on the SRA board approving an equality impact assessment in May.
The modified ARP will be closed to new start-up firms from October this year. Firms will only be able to stay in the pool for 12 rather than 24 months. The SRA board will also pursue ‘an initiative to manage down the risk of unstable firms’.
SRA chief executive Antony Townsend said the regulator had received ‘strong arguments’ in support of keeping the ARP in its two consultations on the issue.
Comments
Waste
Amazingly, Mark Humphries, chairman of the SRA’s financial protection committee, has warned that claims totalling £33m against law firms in the assigned risks pool (ARP) threaten the profession with “catastrophe”.
The average intervention costs £250,000.00m per go and I believe that they did about 70 last year. The SRA have just done two interventions into Wolstenholmes and CCLS which have huge numbers of files and will cost much more than £250,000.00. Probably £2.5 million each. Interventions destroy value and are inherently wasteful. Introducing receivership would solve this problem and radically cut these costs. Stop moaning about £33 million when you waste more than that on interventions each year.
ARP
Firstly, comments from anonymous submitters should not be published. If you can't say it openly, you have no right to say it.
Secondly, and more importantly, the SRA's and the PI insurance market's finances would be greatly improved if, in fact, firms seeking refuge in the ARP actually paid their premiums. A little investigative journalism will reveal that non-payment of the ARP premium is not pursued, so firms that should not be in business in the first place, further escape collapse by saving the PII premium that the rest of us pay.
Naturally, insurers cost in their ARP losses (and lack of premium) into the rates they charge the rest of us. So we end up subsidising members of the profession who are offering a poor service, cannot run a business and should be wound upq. Come on, SRA - get a grip!