The sky did not fall in on 1 September because the Solicitors' Indemnity Fund (SIF) had passed away - but although it is too soon to write the biography, it is not too soon to write an obituary. SIF owed its birth in the mid-1970s to two decisions taken by the Law Society, the first of which was that all solicitors should be insured compulsorily, and the second that compulsory insurance should be provided by a single body. Some of us argued at the time that the two statements did not have any logical connection - it owed much to the same fallacy that "all cows are animals, therefore all animals are cows".
Thereafter, SIF inevitably acquired a life of its own. Its handling of claims has been an object lesson in efficiency. What hamstrung it was the requirement from the Law Society that all firms should be allowed cover, however dreadful they might be. At the outset, this was less of a problem for a whole range of reasons relating to the size and structure of the profession, the work that it was doing and the climate in which it operated. It did mean, however, that the market was artificial and led to premiums that were too high. In the end, it was this state of affairs that killed SIF.
Looking forward to the transitional period of the next couple of years, the Assigned Risks Pool (ARP) will protect the insurable status of those firms that, in an open market, will struggle to fund insurance. Until ARP has disappeared, premiums will be based on a market with limited experience, so it is no surprise that there has been an enormous variation in the figures quoted.
The movement to the open market was never going to be a soft option. Those that are insured are likely to find they receive less tolerance than they used to receive from SIF, particularly in the way in which claims are notified and handled. They may well find that claims are not handled as efficiently, particularly in the early years when the insurers lack experience in our market.
Firms may also find that there is great pressure to introduce risk management measures. Although it can be seen as an imposition of burdensome further regulation, it is nevertheless a good thing that there will be some incentive, which is measurable in a financial way by cheaper premiums. This should encourage better training, more attention to discipline (rather than relying on self-discipline) to keep abreast of the law and to ensure that our client's affairs are handled at the highest level of efficiency and expertise. The long-term hope for the move to the open market is that service standards should improve and claims should fall, it will be less easy to criticise the profession, and our self-confidence might rise - a virtuous, rather than vicious, circle.