Life after SIF
Evidence of well-managed files will help convince insurers to provide cover after the six-year run-off period, says Clive Sutton
One would hope that on the closure of SIF an overall policy could have been arranged to continue the cover provided to all members after the initial six years. That would cover the problem and one would have hoped that on the closure of SIF there would have been a sufficient sum of money put aside to achieve this.
The Sole Practitioners Group, on behalf of members, has a close relationship with brokers in the insurance market with whom we have discussed this problem.
In the absence of any cover being continued following the closure of SIF, and if members are not unduly concerned about having the benefit of ongoing cover beyond the initial compulsory six-year run-off cover, then we are trying to encourage the brokers to obtain additional cover for such members. Alternatively, on closure of practice a policy could be taken out to cover all risks in the future. The difficulty with such a policy is, of course, its open-ended nature, which would not be attractive to insurers.
In addition, the difficulty is the cost of such a policy. At the moment premiums for run-off are something in the region of two and a half to three times the premium for the final year of cover, which has to be offered by the insurance company holding the insurance on the date of closure.
What needs to be achieved is an opportunity for someone closing their practice to be able to shop around to obtain cheaper cover if such was available.
Another factor to be taken into account in the ultimate premium for the compulsory six-year run-off cover and any ongoing cover is the quality of the business which is being insured. If a business does not retain its papers in a satisfactory state after its closure for any claims to be properly argued, then the risk and the premium would be much higher than otherwise.
Evidence of well-managed files which can be accessed to defend any potential claims would have a significant effect on reducing the premium potentially below the sort of multiples which are currently charged.
The important thing is to have access to a broker who is able to give appropriate advice as to the best outcome in any individual situation and that is a facility which the Sole Practitioners Group can provide.
Clive Sutton is honorary secretary at the Sole Practitioners Group