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175 firms lack indemnity insurance for the coming year
Figure 'likely to change on a regular basis' before three month period ends
A total of 175 law firms currently lack an indemnity insurer for the current year and have entered a 'grace' period of three months with their existing insurer, according to figures released by the SRA.
Originally 185 firms told the regulator they had applied for the extended indemnity period (EIP), but 10 have since found an insurer.
The latest figures are significant, as firms were required to notify the SRA by close of play yesterday if they had asked for the EIP. Legal Risk partner Frank Maher said last month that he believed that up to 1,000 firms could close by Christmas after failing to secure indemnity insurance.
It is understood that small numbers of firms have applied for an EIP but failed to inform the regulator. Others are likely to secure insurance before the three month expires.
"If they cannot, then the firm must close at the end of that 90 days as solicitors' firms cannot operate without professional indemnity insurance," a spokesman for the SRA said.
"A firm may continue to practise normally for the first 30 days while it attempts to obtain a qualifying insurance policy, but after that, the firm may only work on existing instructions.
"With firms finding insurance all the time, the number of those in the EIP is likely to change on a regular basis before the 90 days ends."
It was easier for the regulator to keep track of firms entering The Assigned Risks Pool, which ceased to exist from 1 October this year. Firms had to apply to the SRA to be insured by the ARP.
In other changes, the single renewal date for indemnity policies has been abolished from 1 October 2013.
The existing 'side arrangement', under which coverage was provided to uninsured firms that had not applied or were not eligible to enter the ARP, has also been abolished, although claims arising from these firms will continue to be met by the Compensation Fund.
As suggested by the Law Society, the list of qualifying insurers has been renamed 'participating insurers', to remove any suggestion that the insurers involved had been vetted in some way.
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