SRA tells insurers: 'We're solving PI risk pool problems'

SRA chief executive Antony Townsned said the reduction in numbers of firms in the ARP for professional indemnity insurance (PII) is tangible evidence its reforms are working.

There are 32 firms which failed to get cover and ended up in the ARP compared to 309 which ended up in the pool last year.

Antony Townsend, chief executive, said: “During consultation on our financial protection arrangements, we found that one of the biggest challenges facing us was the need to manage down the number of firms in the Assigned Risks Pool (ARP), which was placing a burden upon other firms and inhibiting a competitive market for PII. Therefore, we announced measures to address this as part of the key changes to the arrangements for client financial protection in April.

“These figures demonstrate that our programme of reforms is having the intended effect. We continue to monitor the effect of these changes not only upon firms in the ARP, but also small firms who are particularly vulnerable to increases in insurance premiums.”

The SRA said it was currently consulting on the implementation of a number of the policy decisions announced in April.

These include:

• The closing of the Assigned Risks Pool (ARP) as a provider of policies of qualifying insurance from 30 September 2013 (with the exception of the continued provision of run-off cover incepted before that date)
• A requirement, from October 2012, that all policies of qualifying insurance make provision for extension by 90 days at the end of the insurance period if the insured firm has not taken out a new policy of qualifying insurance
• Changes to authorisation rules to control the work that may be undertaken by firms during that 90-day period
• Provisions for the funding of the ARP in 2012/13 to be provided by both the regulated community and the qualifying insurers
• Provisions to move responsibility for making payments in respect of uninsured firms from the ARP to the Compensation Fund in 2012/13