Caveat emptor in the post-2013 solicitors’ Professional Indemnity Insurance mark
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Come 2013, the Assigned Risks Pool (ARP) for otherwise uninsurable law firms will be consigned to history. And insurers of the potentially uninsurable will find themselves playing a last minute game of pass the parcel; under the new arrangements, the last insurer holding any particular account will be obliged to maintain run-off cover for a six year period.
So between now and then, we’re likely to see some significant tactical moves on both sides. As reported on thelawyer.com, many law firms - particularly smaller ones, and even more particularly, smaller ones whose business portfolio is characterised by a high proportion of conveyancing work - will be (or should be) tightening up their risk management procedures and implementing an urgent action plan to deal with any notified claims against them.
On the other side, insurers are going to be taking a much closer look than they might have done previously at the financial resilience and the claims history of both their existing clients and potential new ones.
Add to the mix the fact that the ending of the ARP might well tempt a number of new insurers into the market - insurers who may or may not have the stomach for a long-term commitment - and it certainly seems to be a case of caveat emptor all round.