The SRA has announced several changes to the PII regime, including the removal of the assigned risks pool and a new requirement for insurers to disclose their credit rating.
The Law Society has commented that it supports:
· The removal of the assigned risks pool (ARP) and introduction of a 90 day period that comprises of an extended indemnity period (EIP) and cessation period. If a firm is unable to obtain a policy of insurance at the end of the 90 days, it must close. This is consistent with the proposal put forward by the Law Society in the first stage consultation. As a result of the second stage consultation, the SRA now agrees that the entire period must be backdated to the end of the original policy. The EIP requires efficient enforcement action by the SRA to avoid firms operating without insurance. The SRA is expected to release in May detailed amendments to the authorisation rules to facilitate this.
· The maintenance of insurance coverage throughout the EIP and cessation period even if work is conducted in breach of the requirement to only perform work in connection with existing instructions throughout the indemnity period.
· The SRA will allow insurers to obtain reimbursement from insureds who conduct work contrary to the rules.
· The SRA’s decision to not introduce a notice period prior to the EIP. The removal of the single renewal date from 1 October 2013 will result in greater flexibility in policy length, which may allow insurers and insureds to work through issues without necessarily triggering the provisions of the EIP.
· The introduction of a requirement that insurers are transparent about their credit ratings (or lack of rating) for the 2012 renewal.