The Solicitors Regulation Authority has unveiled plans to reduce the mandatory insurance cover to help small firms find the right level of protection. They will reduce the level to £500,000 and reduce run off cover to a minimum of 3 years for closing firms.
The SRA is proposing to limit PII cover to individuals, small and medium-sized businesses with turnover below £2 million.
‘The change proposed here will focus protection on the least sophisticated consumers,’ said the SRA. ‘It will promote competition by reducing costs and providing firms with a choice as to the level of cover provided to consumers outside the minimum requirements.’
The SRA says there is nothing to prevent firms choosing to obtain higher or broader levels of cover for clients, particularly commercial clients – or indeed for clients to agree insurance requirements with their law firm.
‘These proposals are designed to ensure that regulation is proportionate and targeted,’ added the consultation. ‘They should assist small law firms in providing the right level of protection to their clients without incurring additional expense that drives up their costs and thus prices to consumers.’
The consultation is expected to end by 18 June with reforms in place for the 1 October renewal date.