Welsh legal practices face closure for missing insurance deadline

Welsh solicitors who failed to meet 1st October compulsory insurance deadline are facing severe challenges, a leading professional indemnity broker has warned.

The warning follows an announcement from the Solicitor’s Regulation Authority (SRA), detailing that 191 law practices across the UK have declared that they are still operating without professional indemnity insurance. It is possible this figure will grow further.

Paul Gardner, director of Swansea headquarted insurance broker Prescott Jones Professions, estimates that more than 10 Welsh firms are likely to be in this position.

Under SRA rules, firms can continue to trade for 30 days after the 1st October deadline whilst they seek backdated cover. However, after this deadline they cannot accept new client instructions, only dealing with existing work. After a further 60 days they must cease to trade altogether.

The announcement of German insurer Berliner’s withdrawal in September created difficulties for many firms and it is likely that over 100 firms in Wales were then required to seek alternative cover very close to the renewal date.

Berliner,an unrated insurer, took over the book of the failed insurer Balva, who were also unrated. Despite warnings about potential risks associated with unrated insurers, it is thought many firms sign up to unrated insurers such as Berliner, due to competitive premium rates.

Paul Gardner said:

“It is concerning that some law firms in Wales may still without professional indemnity insurance.

“Now the initial deadline has passed, it is fundamental for practices to find alternative cover straight away. Firms must continue to seek independent advice and be prepared to devote the time necessary to produce the extensive amount of information required to secure an offer of cover.

“It is not too late but clearly this is a nervous time for some firms, their employees and their clients.”