Cutting back mandatory professional indemnity insurance (PII) for solicitors would be bad for partners, law firm employees and clients alike, the Law Society of England and Wales said in response to proposals to a Solicitors Regulation Authority (SRA) consultation.
“The proposals would radically reduce financial protections for clients and solicitors and are without merit,” Law Society deputy vice president Simon Davis said.
“Clients, employees and solicitors would bear significantly higher risk, but there is no evidence this would be counterbalanced by lower insurance premiums.
“Solicitors and their clients are protected by copper bottomed insurance, which is appropriate given the gravity of many of the issues we deal with for businesses and individuals.”
The SRA proposes reducing minimum cover from the current level of £2-3m, to between half a million and one million pounds. Access to the Solicitors Compensation Fund would also be restricted and maximum payments reduced from £2m to £500,000.
Simon Davis continued: “Insurance brokers say these proposals are unlikely to result in lower premiums, so it’s hard to see how clients could possibly benefit, but it’s easy to see how they might end up paying a very high price for the fall in insurance protection.
“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 without any foundation.
“No other profession in the UK today offers their clients such comprehensive or robust protection. This backstop is key to public trust in solicitors and the legal sector, which in turn underpins the rule of law.”
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