Doubling of premiums and single start date blamed for crisis
One in 20 law firms (about 500) have failed to buy commercial professional indemnity (PI) cover and will fall into the assigned risks pool (ARP) today, the Law Society Gazette reports.
The ARP is the mutual insurer of last resort. Premiums cost up to 27.5% of a firm’s turnover if they apply to enter the pool in time, or up to 47.5% if they do not. Firms in the ARP are also required to pay for inspection and monitoring by the Solicitors Regulation Authority.
A number of firms have already chosen to shut down ahead of the 1 October renewal deadline to avoid paying the increased premiums set by commercial insurers.
Single date must be scrapped
Many solicitors, insurance brokers and insurers have called for the single renewal date to be scrapped.
The Telegraph also warned that firms with fewer than ten partners and whose main business is residential conveyancing could be forced to close down or merge with larger practices.
It said insurers were clawing back losses from recession-driven fraud by doubling their premiums.
