London market trade group warns on solicitors coverage shortfalls.
- David Pilla
- October 2020
The International Underwriting Association is warning that professional indemnity insurance for solicitors could become unsustainable if insurers are not allowed to cancel policies with unpaid premiums. The IUA has discussed minimum terms and conditions of such policies with the Solicitors Regulation Authority and has outlined its concerns in an open letter to the legal industry.
The IUA said it is calling for the right to cancel coverage if premiums are not met, particularly for runoff cover, and for payment of excesses on a policy to be mandatory. Without these measures insurers will likely become more selective in the risks they accept, the IUA said.
“Many solicitor firms are facing economic pressures, and we have already seen an increase in requests for payment of premiums by installments,” Christopher Jones, director of legal and market services, the IUA, said in a statement.
“Insurers have shown their willingness to work with other professions that are struggling to mitigate the short-term economic effects of COVID-19, but the complete lack of any protection around payment of premium and excesses makes it far more difficult to do this for solicitors,” said Jones.
The IUA's letter is directed at all firms subject to SRA regulation that buy professional indemnity insurance under the minimum terms and conditions regime, negotiated each year with insurers, Jones said in an email.
“This encompasses solicitors of England and Wales, law firms of England and Wales, non-lawyers, who can be either managers or employees of firms that the SRA regulates and other types of lawyers, such as registered foreign lawyers and registered European lawyers,” Jones said.
The IUA said “greater protections for insurers around excess payments will give them more confidence and create greater flexibility in their insurance terms, for example, possibly allowing for higher excesses in return for lower premiums,” according to the letter. The IUA seeks to allow a policy to be cancellable if the premium is not paid; allow the payment of run-off premium to be compulsory; and allow the payment of excesses to be made mandatory and “where not complied with, the ability to offset excesses against claims payments,” the letter said.