Q&As

What should I do if my participating insurer becomes insolvent?

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Published on LexisPSL on 08/05/2017

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

  • What should I do if my participating insurer becomes insolvent?
  • What are your obligations?
  • Why do you need new qualifying insurance?
  • Why you should act as soon as possible
  • What is it going to cost?
  • What if I've already made claims against the insolvent insurer?
  • The Financial Services Compensation Scheme (FSCS)

All firms carrying on business must have qualifying professional indemnity insurance (PII) provided by a participating insurer. This Q&A sets out what you need to do if your participating professional indemnity insurer becomes insolvent.

PII covers civil claims against your firm, typically for professional negligence. Under the SRA Indemnity Insurance Rules, every firm must take out and maintain qualifying insurance that meets the SRA's minimum terms and conditions (MTCs). This is a continuing obligation, ie firms must at all times have qualifying PII cover in place.

Qualifying insurance must be taken out with a participating insurer.

If your participating insurer becomes insolvent you will need to act immediately to:

  1. comply with your obligations under the SRA Indemnity Insurance Rules, and

  2. ensure your clients are protected

What are your obligations?

If your insurer is the subject of an insolvency event, you must ensure the firm obtains qualifying insurance with another participating insurer:

  1. soon as reasonably practicable, and in any event

  2. within four weeks of the insolvency event

You should contact your insurance broker as soon as y

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