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For some firms that specialise in crime, or employment, the SRA may be right to say that a lower level of cover may be perfectly adequate, however, firms that undertake work in areas that give rise to little risk of claims already pay smaller premiums than those that undertake work in areas that see a higher incidence of claims. Additionally, the cost of cover is not proportional to the level of cover, because most claims are for a lot less than £2m.
From this whilst I can see that lower premiums may be an attractive aim, in practice reduced minimum cover is unlikely to make much difference to the premiums payable.
Reduced cover should not be an option for firms that undertake conveyancing work, but now that we have limited liability businesses the SRA proposals may create the risk that once firms cease practising the directors, or members, will be able to retire and save saved money by purchasing reduced run-off cover. That may well be at the expense of clients.
There are already problems with firms having insufficient cover and following the decision of the Supreme Court this year in AIG V International Law Partnership LLP, aggregation of claims means that under-insured firms may become a bigger problem. When looking at appropriate levels of cover the SRA will no doubt take account of the risk that claims might be lumped together because they arise from similar acts or omissions.
Following the 'AIG' case it may mean that the present minimum may be inadequate if a firm undertakes volume work even if individual matters are very low value/low risk.

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