Steve Ray – Howden
The Professional Indemnity
Industry’s View on the Regulatory
Environment & Future Predictions
PROFESSIONAL INDEMNITY INSURANCE
BROKING AND ADVISORY SERVICES
CONTENTS
“The Professional Indemnity Insurers and Brokers View on the Regulatory
Environment & Future Predictions”
• A bit of history
• The SRA position
• The CLC position
• What does this mean?
• Other regulators
• The future
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DIFFERING OPTIONS
• SRA regulated firms
• CLC firms
• CILEX
• Bar Mutual
• Faculty of Notaries
• ABS firms
• Insurance arrangements
• Differing regulatory perspectives
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SRA POSITION – HISTORY
• Solicitors in the commercial insurance market since September 2000
• (SIF £250m in 1999 / Insurers £150m in 2000)
• What changes along the way:
• Moved common renewal date from 1 September to 1 October and then
scrapped in 2013
• Increase in minimum limit of indemnity from GBP1m to GBP2m for traditional
partnerships and GBP3m for LLPs and Limited Companies (in 2004/5 year)
• Removal of Assigned Risks Pool
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SRA POSITION – HISTORY (CONT’D)
• Various consultations:
• Reduced limits of indemnity (to £500,000)
• Allowing firms to asses their own appropriate limit of indemnity, including an
overall aggregate
• Reducing run-off cover to a minimum of 3 years
• Previously looked at removing lender claims and Insurers with unrated
security (Quinn, Lemma, Balva)
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SRA CURRENT POSITION
• SRA run-off
• 6 year policy based on 225% to 350% of final year’s premium
• Successor practice rules changed in in 2010, allowing for election to run-off
• Consulting on making LSB regulation transfers easier
• Sticking point is always coverage for reserved activities not covered under CLC
(or others) policy and the run-off / past liabilities
• If same Insurers there are theoretical deals to be done but grey areas means
cannot get passed SRA (also Insurers sign up annually and therefore no clear
comfort that will be there for the 6 year duration)
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CLC POSITION
• Insurance through a Master Policy with requirement to be insured with this
until 2012 (been in place for 20+ years)
• Landscape changed because of one large firm moving away from Master Policy
• But no real opportunity for others until 2015
• SLC open market option since 2015
• Move to Participating Insurers Agreement meaning Insurers agree to provide
coverage for firms subject to agreed minimum terms and conditions
• Free run-off introduced at 1 July 2016 renewal (£2million aggregate)
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WHAT DOES THIS MEAN?
• Still a problem to move from being an SRA Regulated firm to a CLC regulated
firm.
• Frustrating for Solicitor firm’s specialising in Property Law
• SRA advised would be able to transfer from December 2015, March 2016 but
this now seems to be December 2016
• There are Insurers ready, willing and able to provide the polices… but need SRA
onside
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OTHER REGULATORS
• CILEX
• BAR Mutual
• Faculty of Notaries
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THE FUTURE
• What does the future landscape look like?
• SRA membership?
• CLC members?
• Polarisation – larger firms get larger
• Associations / key influencers
• Who does what?
• What about other professions – ABS and Accountants and the like
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