The Solicitors Regulation Authority (SRA) has rewritten insurer regulation to tackle complaints that some insurers are not paying their fair share of assigned risks pool (ARP) costs, the draft 2011 qualifying insurer's agreement shows.
Last year, some professional indemnity insurers believed that their rivals were bending the rules to reduce the amount of solicitors' professional indemnity premium declared to the SRA.
They believed these tactics meant some insurers would pay less than they should do for ARP solicitors' unpaid claims, which are based on market share by written premium.
The latest draft copy of the Qualifying Insurer's Agreement 2011, seen by Insurance Times, has tightened the rules around premium declaration and ARP management.
One insurer source said the SRA had changed the terms 'to prevent the distortions that occured last year'.
The SRA said the final agreement would be published soon. The draft changes show:
- Definitions and instructions around actual premium payable, aggregate excess, calculated premium payable and declaration premium payable.
- Clearer definitions over the primary layers, excess layers and limits.
- Increased power for the ARP manager to investigate qualifying insurers.
The SRA asked Capita to investigate the minimisation techniques.
An SRA spokesman said: "The SRA’s indemnity insurance rules and the qualifying insurers agreement are revised annually. This year the documents are being amended to give effect to the outcome of the financial protection review which was announced in April."
