SRA opts for 'phased approach' when risks pool shuts for good in 2013
There are only three firms left in the SRA’s Assigned Risks Pool and they are only there because they have waivers, the regulator has said.
There were 31 firms in the ARP at the start of this year, but 15 decided to close and the others found indemnity insurance. The three firms with waivers have been given until the end of the indemnity year in October to find insurance.
In a separate move, the SRA has announced that it plans to implement a ‘phased approach’ to firms which cannot find insurance once the ARP shuts for good in October 2013.
Insurers will be obliged to provide a three months ‘period of grace’ for firms it no longer wants to insure.
“A firm may continue to practise while attempting to obtain a policy for the first 30 days of this extended indemnity period,” a spokesman said.
“For the remaining 60 days, the cessation period, firms may only work on existing instructions while attempting to find insurance, or conduct an orderly closure in the case that insurance is not obtained.”
The SRA has also made a minor change in the qualifying insurer’s agreement, requiring insurers to disclose their credit ratings when policies are renewed in the autumn.
Under the new arrangements, should an insurer’s rating change, it would have to inform the SRA and any firm it insured.
Richard Collins, SRA executive director for policy, said: “We will be carefully monitoring the effect these changes have. We have also put new systems in place for insurers to alert us at an early stage where firms are experiencing problems.
“This means we can provide early support to firms and, where necessary, protect consumers from a sudden and disorderly closure which is consistent with our risk-based approach to regulation. The phased approach should ensure a smooth transition and stability in the indemnity market.”