SRA considers credit ratings for professional indemnity insurers

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  • If a minimum rating requirement is implemented, it must not be done without simultaneously reducing the breadth of cover. Otherwise many, possibly over a thousand, firms will be unable to find cover, will close and will cause a massive increase in intervention costs borne by the rest of the profession.

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  • What about credit ratings for law firms? Given the SRA thinks so many may go bust in the next few years, seems like clients, a firm's own lawyers/staff and their banks may deserve something like this.

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  • That might be possible, but the focus on financial stability could mean we lose sight of the fact that law firms are not banks, and how far we should pursue this depends on the appetite for closing down law firms of all sizes and profiles, though I suspect the impact would be more severe at the consumer end of the market. Access to justice, or to legal services at least, would be reduced.

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  • Reducing the breadth of cover would definitely help offset the cost impact from insisting that firms buy from Insurers with a minimum credit rating. Everyone would benefit over time with new entrants more likely to loosen the anti-competitive stranglehold that the 'exclusive' facilities have on the market. Its a concern though that this will not take effect until 2014. By that time the 1,300 Balva policyholders could well have bought replacement policies with an equally uncertain ability to deliver, creating an even worse financial nightmare that could haunt the profession for years.

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