The October 1 deadline for Professional Insurance Indemnity (PII) is fast approaching and The Law Society is advising against reducing the amount of cover required.
The news follows a consultation by the Solicitors Regulation Authority (SRA) which proposed reducing minimum cover from the current level of £2-3 million, to between half a million and one million pounds. Access to the Solicitors Compensation Fund would also be restricted and maximum payments reduced from £2 million to £500,000.
Cutting back mandatory PII for solicitors would be bad for partners, law firm employees and clients, the Law Society of England and Wales said in response to the consultation.
“The proposals would radically reduce financial protections for clients and solicitors and are without merit,” Law Society deputy vice president Simon Davis said.
“Clients, employees and solicitors would bear significantly higher risk, but there is no evidence this would be counterbalanced by lower insurance premiums.
“Solicitors and their clients are protected by copper bottomed insurance, which is appropriate given the gravity of many of the issues we deal with for businesses and individuals,” Davis added.
PII is an essential requirement for the legal profession. It enables companies to trade legally and is one of the largest annual expenses occurred by legal professionals.
Davis continued: “Insurance brokers say these proposals are unlikely to result in lower premiums, so it’s hard to see how clients could possibly benefit, but it’s easy to see how they might end up paying a very high price for the fall in insurance protection.
“Premiums already reflect levels of risk in the work a firm undertakes, and cost is front-loaded into the first £500,000 of cover, so the idea that the current system is unfairly ‘one size fits all’ is without any foundation.
“No other profession in the UK today offers their clients such comprehensive or robust protection. This backstop is key to public trust in solicitors and the legal sector, which in turn underpins the rule of law.”
V4Bprofessions has a dedicated PII finance facility allowing premiums to be funded in easy instalments over the term of the policy. Using a PII finance option allows companies to free-up cash flow and use working capital for alternative business uses.
Low interest rates and credit decisions can be made quickly, and V4B Professions has assisted thousands of legal firms with PII funding. As a broker V4B Professions has access to a wide range of funders providing some of the most competitive rates on the market.
Benefits of PII funding:
- Unsecured funding for insurance policy and/or practicing certificates
- Flexible repayment terms up to the period of insurance
- Dedicated account manager
- Fixed interest rates and costs
For more information on PII funding visit www.v4bprofessions.co.uk or call 01978 668 939.