The Solicitors Regulation Authority earlier this year planned to reduce the minimum cover of PII from £2 million to £500,000, after failing to do so back in 2014.
However, it was confirmed earlier this week that these plans have again been put on the back-burner, with changes to the compensation fund and other more urgent issues taking priority.
It is unlikely that the SRA will discuss changes to PII until next spring and no commitment has been given even for this date.
Why reduce the minimum cover? It is believed that it could help reduce insurance costs for firms, as well as encourage new businesses to enter the legal sector and allow for lower prices for consumers. For small firms especially who work in areas of low risk are seen to be spending more on cover than is necessary. Reducing the minimum cover could lead to lower insurance premiums and encourage new entrants into the market; increasing competition.
However, there are also fears that it could reduce consumer protection as well as inherently hinder the PII solicitors’ market. PII is widely recognised as an important protector of consumer and public interests.
PII cover may directly protect solicitors and law firms from the costs of claims against them, but the real purpose is to safeguard consumers. It provides certainty that any loss incurred by consumers will be compensated without having to rely on the solicitor at fault, or their firm or company.