LET's hope that the continuing chaos that surrounds the demise of SIF is short-lived. The abysmal take-up rate – between 5 and 10 per cent – shows an appalling lack of preparation for such an important issue, and it is certain that some firms will be paying a heavy financial price.
Last year's Law Society recommendation that firms undertake a risk assessment programme appears to have gone almost universally unheeded (but then, does anyone ever listen to the Law Society?) It also remains unclear whether the City firms will reap any financial savings at all from securing all their professional indemnity insurance on the open market.
Fears over potential liabilities in the litigation- frenzied US and the risk of a single mega-claim means premiums for some City firms are likely to rise. Of course, this is nothing new, since taking professional indemnity onto the open market affects only the first £1m of cover, and any increase in the premium is hardly likely to have a debilitating effect on any top or even medium-sized City firm.
So why the apathy? Much of it has to be attributed to the simple lack of choice in the products offered by the insurers. Obviously, the insurers have been hampered by the Law Society's insistence on such a broad policy wording. But, for once, the society must be given some credit for taking a positive step to enable firms to obtain all-encompassing cover.
Choice will hopefully come over the next two years as the insurers develop a better understanding of the market that will enable them to improve their service delivery – if not the product itself.