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Law firms’ anti-risk measures are likely to be probed more thoroughly by insurers if the common professional indemnity insurance renewal date is abolished, according to a leading industry insider. He also revealed in detail a number of “creative accounting” techniques used by insurers to reduce their exposure to the assigned risks pool by declaring premiums that may be £60m less than actually received.

Solicitors Regulation Authority plans to exclude financial institutions from the requirement for compulsory professional indemnity insurance will drive some conveyancing firms out of business, the Law Society has claimed. The longer-term move to remove work for all commercial clients from the scope of the minimum terms and conditions of cover would be short-sighted, it adds.

The Solicitors Regulation Authority has launched an audit of professional indemnity insurers to check they have correctly declared the amount of premium income they received during the recent renewal.

Some 240 of the 336 law firms in the assigned risks pool (ARP) are new to the insurance safety net, with 10-20% of the total thought to pose a “serious risk”, it has emerged. Solicitors Regulation Authority (SRA) papers show that 30-60 firms are in the serious risk category and face immediate SRA investigations, with referrals for regulatory action to be made where appropriate.

There are 383 law firms currently in the assigned risks pool, the Solicitors Regulation Authority has revealed. The news comes as the Association of British Insurers (ABI) gave a strong welcome to an independent report on the need for reform of professional indemnity insurance, saying the market can no longer tolerate periodic crises caused by a combination of “poorly enforced regulation and restrictive policy requirements”.