News that the Solicitors Regulation Authority (SRA) is to drop proposals to lower the levels of professional indemnity insurance (PII) has been welcomed by the Law Society.
In March 2018, the SRA consulted on proposals to reduce the minimum level of compulsory cover required for each claim arising out of matters that are not related to conveyancing services from the current level of £2m (or £3m for relevant recognised or licensed bodies) to just £500,000. The Law Society opposed these plans in its consultation response.
On 19 December, it announced that it no longer planned to make these changes.
“PII is key to maintaining public trust in solicitors and the legal sector, which in turn underpins the rule of law and the globally recognised high standards of the legal services of England and Wales,” Law Society president Simon Davis said.
“The SRA is to be heartily commended for listening and taking account of the evidence presented to them and recognising that their proposed reforms would not deliver the hoped-for benefits.
“Clients, employees and solicitors would have borne significantly higher risk, and there was no evidence this would have been counterbalanced by lower insurance premiums.
“Premiums already reflect levels of risk in the work a firm undertakes, so the idea that the current system is unfairly ‘one size fits all’ is without foundation, and cost is front-loaded into the first £500,000 of cover, so lowering minimum indemnity limits to anything less than that would not have led to savings.
“The proposed changes would have radically reduced financial protections for clients and solicitors and were without merit, so it is hugely reassuring that they have been abandoned.”