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The largest provider of professional indemnity insurance to solicitors has announced that it will not be seeking any new business this year because of the Solicitors Regulation Authority’s failure to abolish the assigned risks pool immediately.

Some 138 law firms have closed after entering the assigned risks pool in the past two years, while solicitors who do not pay their ARP premiums are being pursued into bankruptcy, the Solicitors Regulation Authority has reported. Most of the firms (119) shut through an orderly wind-down, while 19 were closed by an SRA intervention.

Michelle Garlick, a partner in the professional risk team at Legal Futures Associate Weightmans, considers the changes the SRA is planning to make to the professional indemnity insurance regime and is not surprised that it is not happening as quickly as insurers wanted. But in the meantime they will be reviewing their risk assessments and underwriting criteria very carefully.

Proposals from the “timid” Solicitors Regulation Authority to reform the market for professional indemnity insurance are inadequate and will only worsen already fears for the future of the market, the Association of British Insurers has warned. However, the SRA’s blueprint has been welcomed by the Law Society and the Council of Mortgage Lenders.

A temporary extension of cover should replace the pooled liability insurers have for struggling law firms, the Law Society has proposed. The extension of existing cover should be for a minimum of three months and its cost based on the current premium.