Single-person entities could face hurdles getting insurance on the open market, a consultation from the Bar Standards Board has revealed.
In a consultation that suggests the Bar Mutual Indemnity Fund’s monopoly should be extended to single-person entities, the BSB said that of 26 commercial insurers it approached only eight would be willing in principle to insure BSB-regulated entities.
Three said it might be possible.
And there were some indications that commercial providers would be less interested in insuring smaller entities, with at least one of the eight indicating they would not be interested in sole traders, and another commenting that they would not be interested in insuring the smallest firms.
‘There is a risk that if insurance provision for single-person entities is left entirely to commercial forces, some single-person entities (in particular, those with the lowest turnovers) may experience difficulty in obtaining insurance,’ the BSB said.
The consultation comes as the BSB waits to confirm the insurance provisions for the 17 new businesses it has authorised as ‘BSB-regulated entities’.
Of the 17 entities authorised to date, 16 are single-person entities, while one is a partnership between two barristers.
The BSB anticipates that the number of single-person entities applying for authorisation is likely to continue to growth further and faster than multi-person entities.
Under the current rules, BSB-regulated entities are able to insure themselves either on the open market or through the BMIF, which has a monopoly on insuring self-employed barristers.
But the BSB said that allowing single-person firms to do this could hurt the ‘sustainability’ of the BMIF if significant numbers of self-employed barristers seek to incorporate their practices and go to alternative providers.
‘Extending the BMIF monopoly to single-person entities will ensure the mutual model can continue to operate in the public interest in future,’ the BSB said.
It added that, at the time of writing, the majority of entities that have applied for authorisation have indicated that the BMIF would be their preferred choice of insurer.
The BMIF has offered to provide primary layer indemnity insurance at the 2015 renewal to single-person entities on the same basis as for self-employed barristers.