SIF provides cover of £1 million per claim for solicitors upon expiry of the six year compulsory run off cover under the SRA Minimum Terms and Conditions where their practices have closed without a successor practice. This was due to end on 30 September 2022, having previously been extended.
The SRA has announced that it will seek agreement from the Legal Services Board (LSB) for a further 12 month extension to enable detailed consideration of key points raised in feedback.
Meanwhile the LSB has published a discussion paper: Financial Protection Arrangements for consumers. At its board meeting on 26 April 2022, the LSB approved a project to improve the way frontline regulators approach financial protection for consumers.
There are two points of particular significance. First, while the apparent aim is to avoid unnecessary cost for law firms (and by ex-tension, consumers), the issue really comes down to the claims. Someone has to bear the losses, whether that be insurers, a compensation fund, the law firm – or the client. How that is funded, is only a secondary consideration based on matters such as convenience, management cost, and capital requirements.
Secondly, we note that the LSB paper refers to the claims data which the SRA collected from the insurance market for the period from 2004 to 2014. It must not be forgotten that the data was fundamentally flawed for two reasons: it did not include data from insurers which had become insolvent (and in many cases probably had the worst claims experience), and the published data bizarre-ly, for reasons which have never been explained, omitted claims which were reserved but not paid, so the conclusions which can be drawn from it are few and they should not form the basis of future decision making.
A case on general insurance, Quadra Commodities SA v XL Insurance Company SE & Others [2022] EWHC 431 (Comm) is of note as it is the first reported decision involving a claim for damages against an insurer under section 13A of the Insurance Act 2015 for alleged failure to pay a claim within a reasonable time. This aspect of the claim failed.
See www.legalrisk.co.uk/News for links to the above.
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