The Solicitors Regulation Authority will try again to cut the minimum terms of solicitors’ insurance early next year, undeterred by its last unsuccessful attempt at reform. Crispin Passmore, executive director of policy, said the regulator will consult on details of new conditions of cover.
A previous proposal foundered in 2014 when the oversight regulator, the Legal Services Board, blocked SRA plans to cut minimum cover from £2m to £500,000. It is likely that the fresh proposal will seek similar figures - and to be equally controversial in some quarters.
Speaking at a Law Society conference on Thursday, Passmore said the present terms and conditions were ‘prescriptive’ and set at a higher level than any other jurisdiction. 'Some might say it is a gold standard and some will say it is gold plated and higher than it needs to be,' he said.
Passmore said smaller firms are spending up to 7% of their income on indemnity insurance and he repeated that premiums could fall under reformed conditions. 'The [current] level of cover is almost certainly wrong for every law firm. Half obtain more cover than that and many don't need that level,' he added.
Meanwhile, the SRA has said it plans to change indemnity insurance rules to make it easier for firms to switch their regulator. Under current regulations, firms moving to another legal services regulator must obtain six years' run-off cover, leaving firms having to take out two sets of insurance. From October, the SRA will no longer require the run-off cover.
Passmore said: 'This change would give firms that choice, encouraging a modern, competitive market that provides affordable and accessible services for the public and businesses.'
Law Society president Joe Egan said: 'Our chief concern now is that the LSB scrutinises the regulator’s transfer protocols to ensure that clients of firms that switch regulator continue to be protected by an adequate combination of professional indemnity insurance, run-off cover and the various compensation funds.'