Q&As

Does the insurance distribution regime apply to commercial clients—law firms?

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Published on LexisPSL on 05/12/2018

The following Practice Compliance Q&A provides comprehensive and up to date legal information covering:

  • Does the insurance distribution regime apply to commercial clients—law firms?

Does the insurance distribution regime apply to commercial clients—law firms?

The requirements of the Solicitors Regulation Authority’s (SRA’s) insurance distribution regime have very limited application in relation to insurance distribution activities for commercial clients regarding contracts of insurance covering risks within the following categories:

  1. railway rolling stock, aircraft, ships, goods in transit, aircraft liability and liability of ships

  2. credit and suretyship, where the policyholder is engaged professionally in an industrial or commercial activity or in one of the liberal professions, and the risks relate to such activity

  3. land vehicles (other than railway rolling stock), fire and natural forces, other damage to property, motor vehicle liability, general liability, and miscellaneous financial loss, in so far as the policyholder exceeds the limits of at least two of the following three criteria:

    1. balance sheet total: €6.2 million

    2. net turnover: €12.8 million

    3. average number of employees during the financial year: 250

(SRA Financial Services (COB) Rules 2019, r 22)

It is for firms to decide on a case-by-case basis whether a particular insurance distribution activity meets the above criteria (rule 22). While some of the largest firms may be able to (and choose to) rely on the rule 22 exclusion, for many firms it is unlikely to apply.

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