The majority of solicitors in England & Wales still renew their insurance on 1 October. With possible changes in the Minimum Terms and Conditions on the horizon, this could be the last October renewal offering the current levels and breadth of cover. Firms should therefore consider buying cover for longer than 12 months if they can. The proposed changes also need to be factored into strategies on law firm mergers and acquisitions and retirement planning.
When considering levels of cover, firms should pay particular regard to the risk of claims being aggregated and subject to one policy limit. We are advising many firms on coverage issues and claims and on block notifications where this is a significant problem, with claims far exceeding their policy limits.
We have commented in previous issues of Risk Update and in articles on why we believe the proposals for change from the Solicitors Regulation Authority are misconceived. The assumptions on which the proposals are based appear to be more flawed than many have realised. The statement in the consultation that ‘[some] 98 percent of historic claims in our data set would have fallen within this limit’ appears to be incorrect, as the SRA’s data covered the period 2004 to 2014 but excluded reserves on outstanding claims. These must have resulted in millions of pounds in claims payments since 2014. For the final policy year, it is likely that over 90 per cent of claims payments and reserves will have been omitted, with lesser amounts for earlier years.‹ Back to Publications