The Law Society understands that purchasing professional indemnity insurance (PII) can be difficult for small firms. We provide a full suite of advice to support our members in this extremely important purchasing decision.
The Law Society provides a range of guidance specifically designed for small firms. This guidance will be update throughout the year as the 1 October renewal deadline draws closer:
- PII practice note - outlines the regulatory requirement to obtain PII and provides an introduction to the application process and market-related issues.
- Setting up your practice - regulatory requirements - outlines the regulatory requirements to consider when setting up your practice, including your PII requirements. It also highlights the importance of planning for your retirement and run-off costs before embarking on any new venture.
- The importance of insurer financial security - the Law Society understands the commercial pressures on firms that may tempt them to choose the cheapest quote for their professional indemnity insurance. However, we want our members to understand the true cost of this cover in the event that an insurer becomes insolvent.
- A guide to top-up or excess layer insurance - this guide outlines what should be considered when assessing how adequate your PII arrangements are and highlights situations where it may be prudent to purchase excess layer cover above the minimum required by the SRA.
- Retirement calculator - a tool to assist solicitors to work out an indicative figure that should be saved each year as part of their retirement planning to prepare for the likely cost of run-off cover under the mandatory PII policy.
- PII Buyers' Guide - a useful guide that explains the different types of intermediaries in the market and has tips to help solicitors get the most out of their relationship with brokers.
- Transparency campaign - the Law Society encourages all solicitors to ask their broker what they are receiving in commission this renewal. This disclosure can be used by you as part of a 'conversation starter' about what level and type of service brokers are providing for that remuneration.
- Insurers' Guide - a non-exhaustive list of those insurers who are participating in the market each year. It sets out the segments of the market they are prepared to write and how solicitors can access them (i.e. directly or via a broker). This is updated throughout renewal so check out Professional Update or follow us on twitter @LSRegAffairs to make sure you are using the most up-to-date version.
- PII webinar - available for free download from CPD Centre (just register and add to record).
- Insurance matters - a free magazine with latest market intelligence.
- FAQs
PII reforms that will take effect in 2013
- Removal of the single renewal date from 1 October 2013.
- The removal of the assigned risks pool (ARP) and introduction of a 90 day period that comprises of an extended indemnity period (EIP) and cessation period. If a firm is unable to obtain a policy of insurance at the end of the 90 days, it must close. This is consistent with the proposal put forward by the Law Society. We maintain that the EIP requires efficient enforcement action by the SRA to avoid firms operating without insurance.
Read more about ARP - The Law Society will be providing further guidance and support to our members on these changes throughout 2013.