Lowering the professional indemnity insurance (PII) threshold would not necessarily reduce costs and could only have “downside risk”, City lawyers have warned.
Responding to Solicitors Regulation Authority suggestions in a July discussion paper that the PII minimum cover of £2m could be reduced to as low as £500,000 in some cases to reduce premiums and promote greater flexibility in the profession, the City of London Law Society (CLLS) expressed concern.
In its official response, published last week, the CLLS points out that any cost savings would be “postponed” or “tapered” for the six-year run-off period which operates. It points out that, given the price of houses, no firm that does conveyancing in London or the south east could limit cover to £500,000, and nor would firms with commercial clients be advised to do so.
The CLLS states: “The discussion paper adduces no evidence that any of the proposals would in fact attract cost reductions of any meaningful magnitude.”
