Solicitors have voiced concerns over ‘knee-jerk’ proposals to abolish the assigned risks pool (ARP) next year in their responses to a Solicitors Regulation Authority consultation on the issue.

The Law Society said it did not support the SRA’s plan to scrap the pool, which it said provides ‘an important safety net to firms disadvantaged by the hardening insurance market – with a significant number able to return to the open market after a short period of cover by the ARP’.

The ARP provides professional indemnity insurance to firms that cannot find cover on the open market, and charges high premiums of up to 27.5% of gross fees. The SRA launched a consultation on abolishing the pool in November.

Law Society president Robert Heslett said: ‘The ARP is an integral element of client protection… and its existence is consistent with the principle established by council that the regulator, not the [insurance] market, should determine whether a firm should stay in practice.’

He added: ‘The Law Society would also like to see changes to the successor practice rules to enable more firms to merge or be acquired, and an overarching approach to closure which doesn't bankrupt solicitors.’

Heslett said any changes to the ARP should only flow from a ‘holistic review’ of the indemnity system, adding that the Society did support the SRA’s proposals to prevent start-ups from entering the ARP, subject to a full impact assessment and 12-month transition period.

‘We believe that current requirements to open a practice are too lax, and this initiative may encourage better business planning in order to demonstrate that a firm represents a good risk,’ he said.

The Law Society also supports a reduction in the maximum period a firm can spend in the ARP.

The Sole Practitioners Group (SPG) warned that scrapping the ARP would be a ‘knee-jerk reaction’ to the ‘unprecedented’ economic situation facing high street conveyancing firms at the last renewal.

Janis Purdy, chairwoman of the SPG’s indemnity committee, said: ‘Closing the ARP would cause panic in the market, but not eradicate bad firms. They will continue, even uncertificated and uninsured, and effectively underground.’

Purdy added that the management of ARP firms should be ‘rigorous’, with the SRA visiting and assessing them all ‘in the first month’.

Cordella Bart-Stewart, chairwoman of the Black Solicitors Network, said it was the wrong time to scrap the ARP when accusations that some ethnic minority solicitors had been the subject of discrimination by insurers had still not been resolved. She added that there were indications that ethnic minority solicitors would be disproportionately affected by the ARP closure.