Professional Indemnity Insurance
The Law Society campaigns for changes of the professional indemnity insurance for quite some time with an aim to encourage the creation of a competitive market and more affordable insurance options. The Society, however, expressed disappointment over proposition by the Legal Services Consumer Panel which suggests creation of a single compensation fund scheme that would cover all legal practitioners, arguing that many things have been left unclear. The Society also expressed a concern that the proposed scheme may not be appropriate for all cases and may fail to provide proper protection to the consumers.
The Law Society and Legal Service Board Very Critical About the Proposed Single Compensation Fund
The Panel’s proposition in regard to creation of a single compensation fund is a response to a request by the Legal Service Board (LSB). The latter called the Panel to make an investigation of suitability of the protection agreements and determine the minimum standards for protection of the consumers. While both the Law Society and the LSB welcomed many of the Panel’s suggestions on good practice, they were both very critical about the proposed single compensation fund.
According to the Law Society, the single compensation fund scheme which would encompass all legal practitioners is unsatisfactory, indirectly suggesting that the Panel was superficial in its investigation of the issues and formation of the proposition. Representatives from the Law Society explained that the Panel didn’t say anything about how the proposed compensation scheme should be set up in practice nor about its administration across different regulatory sectors including keyperson insurance and public liability insurance. They added that the Panel also failed to provide enough evidence that the proposed scheme will protect the interests of the consumers.
The Law Society also resents the Panel for not addressing the balance between the level of protection for clients. According to the Society, it remains unclear what is the definition of a comprehensive cover and whether there are any exceptions in which the comprehensive cover may not be applicable or worth the cost which will fall on the consumers.
The LSB criticised the Panel for failing to consider risk-based contributions and how they will be measured. They added that they aren’t convinced about cost benefits and expressed disappointment over the Panel for failing to asses its proposition’s impact on competitiveness of the legal sector and its diversity.
Law Society Calls Against Endorsement of the Proposed Single Compensation Fund Scheme
Arguing that the proposed single compensation fund scheme lacks evidence for proving protection to the consumers, the Law Society publicly called the LSB against endorsing the Panel’s proposition.