The Law Society has criticised Solicitors Regulation Authority (SRA) plans to cut compulsory indemnity cover as ‘utterly misguided’.
The SRA has proposed reducing the mandatory minimum professional indemnity insurance (PII) cover from the current £2m-£3m to £0.5m-£1m. It would also restrict access to the Solicitors Compensation Fund and reduce maximum payments from £2m to £500,000. Its proposals are set out in a consultation paper published last week and due to end on 15 June, ‘Protecting the users of legal services: balancing cost and access to legal services’.
Paul Philip, SRA Chief Executive, said: ‘Our proposals will help firms—particularly small ones—make sure they are not paying more than they need to protect themselves and their clients. The public would still have an appropriate level of protection, while potentially benefiting from lower costs and more choice.’
However, the Law Society said the proposals would hurt both solicitor and client.
Christina Blacklaws, Law Society vice president, said: ‘It’s important that the insurance standards are reviewed, but we need to get the balance right between protecting consumers, protecting solicitors and promoting a competitive insurance industry.
‘Premiums already reflect levels of risk in the work a firm undertakes, and cost is front-loaded into the first £500,000 of cover, so the idea that the current system is unfairly “one size fits all” is nonsense. Solicitors and their clients are protected by gold standard insurance, which is appropriate given the gravity of many of the issues we deal with.’
The Law Society further asserts that the SRA has not provided any evidence that its proposals would lower costs either for solicitors or their clients.
Blacklaws said the Law Society had been told by brokers that the proposals were unlikely to result in lower premiums. She said public trust in the legal sector was underpinned by the financial protections solicitors could offer to their clients.
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