185 firms apply for the extended indemnity period
The Solicitors Regulation Authority (SRA) have announced that a total of 185 firms have applied for the extended indemnity period (EIP) of insurance having failed to renew their Professional Indemnity Insurance (PII) cover by 1 October.
With the abolition of the Assigned Risks Pool, firms who have been unable to obtain PII cover have no option but to apply for the EIP – introduced this year as the one of a raft of changes to financial protection arrangements introduced by the SRA .
Firms who cannot obtain PII cover have 90 days further cover from their old insurer while they try to obtain a new policy. If they cannot, then the firm must close at the end of that 90 days as solicitors’ firms cannot operate without professional indemnity insurance. The period is split into a 30 day period where they may continue to practise as before and a 60 day period when they are not permitted to take on new clients and must instead look at winding down their firms.
The SRA go on to report that of the 185 firms that have applied for the EIP, ten have since secured cover, leaving a total of 175 that are now in the 90-day period.
Other changes introduced this year are:
- The single renewal date has been removed for any policy starting on or after 1 October 2013
- The existing ‘side arrangement’, whereby coverage is provided to uninsured firms that have not applied or are not eligible to enter the ARP, was withdrawn with effect from 1 October 2012, and instead claims arising from such firms will continue to be met by the Compensation Fund
- As suggested by the Law Society, the Qualifying Insurers List will change its name to the Participating Insurers List. This is to remove any misunderstanding that the insurers involved have undergone any vetting by the SRA
Firms had five working days to inform the SRA if they wished to enter the period, although there are some which may not have yet done so. Any that have failed to notify of their intention to apply for an extension should do so as quickly as possible by emailing email@example.com, stating who their previous insurer was.
With firms finding insurance all the time, the number of those in the EIP is likely to change on a regular basis before the 90 days ends.