The Solicitors Regulation Authority is investigating two firms that should have closed last year because they did not have a valid insurance policy.
Craig & Co Law Ltd, based in Wigan, Lancashire, and Active Solicitors & Co Ltd, based in Blakenhall, Wolverhampton, were among 39 firms that entered the extended policy period on 1 October and had until the end of December to renew indemnity insurance.
Of the remaining 37, most completed the process of orderly closure, merger or acquisition, while a handful successfully obtained cover while in the extended policy period.
Robert Loughlin, SRA executive director of operations and quality, said the two named firms do not appear to have valid insurance and have not closed properly.
‘We are investigating them in order to protect the public interest,’ he said.
‘While the majority of those that entered the EPP have worked with us closely and provided assurance about their circumstances, these two have not provided us with the information we require to be satisfied that client matters have been dealt with properly.’
Last year saw a dramatic fall in firms entering the EPP, from 287 in 2013 to 39.
The EPP of 90 days is broken down into phases: the 30-day extended indemnity period in which firms can carry on as normal as they seek to renew, then a 60-day cessation period during which they cannot take on any new instructions and must plan for closure at the end, should they not secure a new policy.
For firms that renew their policies on 1 October, the extended policy period finished on 29 December in last year's process. However, since the introduction of variable lengths of policy, not all firms will have the same EPP.
Around 15% of firms have moved their renewal date away from 1 October.
Meanwhile, the SRA has also revealed that the biggest participating insurer in the solicitors market, QBE Insurance, increased its market share from 14% to 17% in 2014. The next two biggest firms in terms of market share, Travelers and Zurich, both saw their percentage of share fall.
There were 31 participating insurers in 2014/15 compared with 26 the year before.
Three unrated insurers, Alpha, Elite and Enterprise, remained in the market but saw their collective share of the solicitors market fall from around 12% in 2013/14 to 8% last year.