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I don't think it is right to say that SIF failed due to underfunding as it is still solvent. It lost the support of the profession for a variety of reasons. One was that various sectors of the profession perceived that they were subsidising other sectors. They may not have been right, though there will always be some firms in a scheme who obtain cover when they might not in the open market.

Overall, allowing for the profession's increase in fees over the past 16 years, I think the rate it is paying has gone down, but that in turn may explain the large number of insurers which have pulled out of the market - and the number who have ended up insolvent. SIF was probably charging the 'right' amount, if there is such a thing - an amount which is in line with the claims, plus operational expenses (which were lower than the market in general), with no mark up for investors' profit.

I think it would be possible to run a better SIF now, with the benefit of lessons learned and experience in other jurisdictions, particularly Australia and Canada, but I doubt there is an appetite for it in the profession at large, and even less so in the regulatory community which seems to be on a mission substantially to reduce the scope of cover to the point it provides little protection for anyone.

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