Closed Consultation
Indemnity Insurance Rules: Successor practice definition
13 February 2010
The deadline for submission of responses to this consultation was 12 February 2010.
The information that appears below is for reference purposes only.
An analysis of responses is available below.
Download an analysis of responses to the consultation (PDF 15 pages, 133K).
Introduction
Our Financial Protection Committee is conducting a fundamental review of the Assigned Risks Pool (ARP), the system under which solicitors who are unable to obtain insurance cover on the open market are given temporary cover to enable them to remain in practice. This is the subject of a parallel consultation document.
One of the issues highlighted by that review is the anecdotal evidence that some solicitors who want to retire are unable to sell their firms, as no firm is prepared to run the risk of being classed as a "successor practice" for professional indemnity insurance purposes. This means that the goodwill of the ceasing firm may have little or no value. If a firm ceases without successor practice, the principals of the firm are liable to pay an additional one-off premium for the compulsory six-year, run-off cover. This can cost typically between two and three times the annual premium. Firms that cannot afford to pay such a premium may well be forced to continue in practice and may end up in the ARP.
In order to make it easier for practices to cease in an orderly fashion it is proposed that the successor practice rules should be made more flexible whilst maintaining client financial protection.
Download the consultation paper
Confidentiality
We may publish a list of respondents with a report on responses. Partial attributed responses may be published.
If you prefer any part or aspect of your response to be treated as confidential, please ensure that you advise us accordingly. Our forms include a question that asks you to state your preference with respect to confidentiality.