SRA: tomorrow the deadline for notification
Firms that have not secured professional indemnity insurance (PII) have until tomorrow to notify the Solicitors Regulation Authority (SRA).
Despite the abolition of the single indemnity renewal date last year, 1 October remained the deadline for more than 90% of law firms.
The extended policy period (EPP) now takes effect for those which have not obtained new cover – whether because they could not find it or because they are using the EPP to close down. Their 2013/14 insurers stay on risk, although any new insurer will have to backdate their cover to 1 October.
The EPP is made up of a 30-day extended indemnity period, and then a 60-day cessation period. During the latter, the firm can only deal with existing instructions and cannot take on any new clients, or new instructions from existing clients. If it does not new insurance in place by 29 December 2014, it will have to close.
According to SRA figures, 287 firms entered the EPP last year, and 149 of them found insurance during the three months. There was controversy over whether the SRA should publish the names of those without insurance, which it eventually did in January.
Recently the SRA published its first decision fining a law firm for not closing down properly after failure to secure indemnity cover by the end of EPP. AJ Bond & Co, based in Bromley, Kent, continued to hold “live client files and monies” after that date.
A spokesman for the SRA said firms entering the EPP “must notify the SRA and its participating insurer in writing as soon as reasonably practicable, and in any event no later than five business days, namely by Tuesday 7 October 2014”.
An analysis of the participating insurers for 2014/15 showed that there were only three unrated insurers left for law firms to choose from, half the number of two years ago. In May the SRA dropped its plans for a ban on unrated insurers, because of concerns of a disproportionate impact on sole principals and small firms.
The remaining unrated insurers are Alpha Insurance, based in Denmark, which entered the market in 2010, Elite Insurance, based in Grantham, Lincolnshire and Enterprise Insurance Company, based in Gibraltar. Alpha’s market share last year was recorded as 6.5%, Elite 3.95% and Enterprise 1.75%.
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