The SIF will close on 30 September 2021 so it’s important to know what options are available.
Closure of the Solicitors Indemnity Fund (SIF) has been delayed by one year.
The information provided here remains relevant for the next 12 months.
How this will affect solicitors
After a legal firm closes, its clients and partners are protected for compensation claims by run-off cover. Run-off cover is purchased as part of the firm’s professional indemnity insurance (PII) and lasts for six years.
Insurance after this six-year period is called supplementary run-off cover and is currently funded by the Solicitors Indemnity Fund (SIF).
The SIF will close on 30 September 2021 so it’s important to look at other options as soon as possible. Without cover, former principals of firms that closed after 31 August 2001, their estates, and even individual employees, may be personally liable for losses from any claims that are made.
Why supplementary run-off cover is necessary
Around 11% of claims are made after the mandatory run-off period has expired. Most occur between six and 15 years after a firm has closed.
Some types of legal work are more at risk of claims being made after the six-year run-off period, particularly:
- wills and trusts
- child personal injury
What you need to do
We recommend you ask your current broker whether they’re able to extend your policy beyond the mandatory six-year period. If they’re unable to do this, or to provide alternative cover, you should contact other brokers as soon as possible.
If your firm covers legal work outside the higher risk groups, we suggest you still consider your potential liability before deciding whether to get alternative cover.
Supplementary run-off cover does not have to comply with the Solicitors Regulation Authority (SRA) minimum terms and conditions (see Annex 1 of the SRA Indemnity Insurance Rules), so you may be able to purchase less comprehensive cover which would still meet your needs.
You can improve your chance of obtaining cover if you can provide evidence that you:
- work in low risk areas
- have a good risk management system
- have a good claims history
If you do not have records, you should ask your previous insurer for copies of your last three proposal forms. You should also gather any relevant papers that may still be available as soon as possible.
We’re currently looking at the possibility of an alternative to the SIF and will publish more information as soon as we can.
Help and information
There’s more information on the closure of the SIF on the SRA website.
For help and support, contact our Practice Advice Service.
Call 020 7320 5675
Opening hours: 9am to 5pm, Monday to Friday