According to The Insurance Times, the Solicitors Regulation Authority (SRA) have scrapped their recently redrafted version of the Qualifying Insurers’ Agreement for Professional Indemnity Insurance following complaints that some insurers were unfairly “under-declaring” Assigned Risks Pool (ARP) contributions.
If a solicitors firm is unable to obtain insurance in the open market they are, for a limited period, covered by a collective scheme where all qualifying insurance companies share the burden of the risk based broadly on their market share. So if Chartis writes 16% of the non ARP market it should pay 16% of the ARP claims. Unfortunately there are allegations that under declaring of premiums has occurred with some insurance companies to avoid the full burden of the ARP’s liabilities.
A spokeswoman for the SRA said: "We have recently become aware of a gap in the QIA regarding the declaration of Relevant Premium Income (RPI) connected with multi-year policies which, if unaddressed, could unfairly skew the Assigned Risks Pool (ARP) percentage participations for 2011/12”.
Drafted and now approved by the SRA’s Financial Protection Committee, the amendments have now been circulated to all qualifying insurers.
At a time when trust between the insurance sector and the solicitor community is poor it seems unfortunate that the SRA missed this gap at the first draft. This will do little to encourage insurance companies to believe that the SRA is listening to their concerns about the operation of the professional indemnity insurance provisions. Ultimately professional indemnity insurance plays a significant role in giving clients trust in solicitors but if insurers fail to feel that the rules are fair they will not operate in this market and the lack of price competition will cause the cost of insurance to continue to rise.
Today’s Conveyancer, bringing you the latest conveyancing news and updates.