The City of London Law Society has warned that proposals from the Solicitors Regulation Authority to reduce the minimum indemnity insurance cover could risk damaging the solicitor brand.
The regulator has suggested reducing the £2m minimum cover level. In a discussion paper in July it said the lower limit would reduce premiums and increase flexibility.
But in a response the CLLS said the discussion paper shows no evidence that the proposals would reduce insurance costs of any meaningful magnitude, which means the plans could have only a ‘downside risk’.
‘The solicitor brand should not be placed at risk of harm, without well-grounded assurance that any changes will lead to worthwhile savings,’ it said.
'We have a strong concern that one impact of the changes under discussion may be a significant increase in the incidence of coverage disputes and uninsured claims, and so undermine confidence in the profession.’
The CLLS said that personal indemnity insurance for solicitors in the London market is part of ‘brand solicitors’, and that a strong solicitor brand has significant benefits to the profession.
‘The SRA should have compelling evidence that changes would bring real net benefit to firms before making changes that risk reducing consumer protection,’ the response said.
The society added that the proposed changes could lead to a number of uninsured claims, and expose clients to a greater insolvency risk.
It also noted that in 2014 the SRA failed in an attempt to cut the minimum insurance level to £500,000, after 92 out of 126 responses to a consultation opposed the plans.
The comments echoed those made earlier this month by the Law Society, which also warned that reducing the minimum could damage firms and destroy confidence in the legal profession.