Firms warned to declare PII position
The Solicitors Regulation Authority (SRA) has issued a warning to firms that they must declare their insurance position if they are to avoid being in breach of regulations.
Firms had until the close of business on 6 November to let the SRA know if they had still failed to secure professional indemnity insurance renewal and thus needed to enter the second section of the new Extended Policy Period (EPP). During this 60-day second phase, called the Cessation Period, firms can only deal with existing instructions and must worktowards closing down at the end of the EPP.
Agnieszka Scott, Director for Policy and Financial Protection, said:
“So far we have shown a lot of understanding towards firms that have been late in letting us know their insurance position, but now, more than a month later, there really is no excuse. It is a requirement in the regulations that firms inform us of their situation and from now on, we will have to think about appropriate enforcement action for those that fail to contact us.
“What these firms need to remember is that if they failed to secure a new policy by 1 October, they automatically qualified for the Extended Policy Period and are therefore still practising with insurance. They won’t be automatically closed down if they tell us they don’t have a new insurer yet, but they are in breach of the insurance regulations by not contacting us.”
Rule 17.3b of the Indemnity Insurance Rules states
Notifications from firms should be made in writing to InsuredReports@sra.org.uk, stating who the firm’s insurer was for 2012/13.
Previously, firms entered the assigned risks pool (ARP), but this closed on 1 October 2013 (apart from issues involving prior-year obligations and run-off cover).