Only 28 firms enter ARP
End to fears of bumper crop as profession shares financial burden
Only 28 law firms applied to the Assigned Risks Pool by the end of yesterday, the SRA has said. This compares with the 53 firms which applied by 4 October last year. That figure turned out to be the peak.
There were fears that the number of applications this year could be much higher, as the profession now has to share the financial burden of paying for the ARP with the insurance industry. Applications hit 411 in 2010.
Firms which enter the pool this year will only be allowed to stay for six months, as opposed to the previous limit of a year. Beyond that time, they will have to shut, unless they can obtain a waiver.
By August this year there were only three firms in the ARP, all of which had secured waivers. The ARP will close at the end of September 2013, and instead insurers have agreed to offer struggling firms a three month period of grace.
Richard Collins, SRA director for policy, said the regulator believed the arrangements being implemented offered the best way of ensuring client protection.
'The changes we have introduced will ensure firms have PII in place that provides the required level of consumer protection within a sustainable market for the long-term, by creating a competitive and open insurance market.
'We are implementing this in a phased way over a number of years to ensure a smooth transition and maintain stability.
'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.'
For the first month of their period of grace, firms can continue to practice while attempting to find a policy, but for the remaining 60 days, the 'cessation period', they can only work on existing instructions.