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The SRA Handbook is no longer in effect. It was replaced by the SRA Standards and Regulations on 25 November 2019.

SRA Handbook

Back to version 21

Version 5 of the Handbook was published on 01/10/2012. For more information, please click 'History' Above

Rule 6: Insolvency of qualifying insurer

6.1

If a firm is carrying on a practice which is being provided with qualifying insurance by a qualifying insurer (whether alone or together with other qualifying insurers) and that qualifying insurer is the subject of an insolvency event then, subject to any waiver under Rule 19.1, the firm and any person who is a principal of the firm must ensure:

(a)

that the firm has in place qualifying insurance with another qualifying insurer which must be arranged as soon as may be reasonably practicable and in any event within four weeks of such an insolvency event;

or, in the case of an eligible firm,

(b)

that the firm applies within that period of four weeks to enter the ARP in accordance with the procedure set out in Rule 10.

Commentary:

It is important to be aware that the arrangements for professional indemnity insurance put in place by the SRA do not seek to protect firms against the insolvency of a qualifying insurer. If an insolvency event occurs in respect of an insurer, that insurer will cease to be a qualifying insurer for the purposes of writing new policies and firms insured by that insurer must effect alternative insurance in accordance with these Rules. This is because, in such circumstances, the insurer may not be in a position to pay claims in full. Any firm which has qualifying insurance with a qualifying insurer which is the subject of an insolvency event is required therefore to obtain replacement cover as soon as possible, and in any event within four weeks of the insolvency event occurring. Having done so, a firm should cancel the policy with the insolvent insurer and, if entitled to do so, seek a return of the premium relating to the balance of the policy period from the insurer which has become the subject of the insolvency event.

6.2

Any firm that enters the ARP by reason of a qualifying insurer being subject to an insolvency event may not remain in the ARP beyond 30 September 2013, regardless of the date on which the firm entered the ARP , except in respect of an ARP policy under which the period of run-off cover pursuant to clauses 5.1 and 5.2 of the ARP policy commences on or before 1 October 2013 or an ARP run-off policy which incepts on or before 30 September 2013).

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