All practising firms of solicitors in the United Kingdom have an obligation to ensure that they hold a qualifying professional indemnity insurance policy at all times or face closure within 30 days of the expiry of their existing policy.
Firms that fail to secure the insurance enter into the extended indemnity period (EIP) which allows them a further 30 days to secure the qualifying insurance.
If they fail to secure the insurance by the end of the 30 day extended indemnity period, they enter the Cessation Period, which allows for a further 60 days to secure the qualifying insurance policy.
During the cessation period the firm cannot accept new work but may continue to work on existing clients whilst working to close their business in an orderly fashion. Failure to secure the insurance during the CP will result in closure of the firm.
Any firm that enters the EIP and the CP must notify both the SRA and the participating insurer, the underwriter behind the policy that has just expired, within 5 days.
In spite of the tremendous amount of work by firms, brokers and insurers each year a significant number of firms fail to secure the qualifying insurance in time for renewal and enter the EIP.
Entry into the EIP is not favourable but it is also not necessarily terminal. Terms are still avaiable from many underwriters.
If you have entered the EIP, we still may be able to assist you with the arrangement of your qualifying insurance and you should contact Steven Lewis on 0161 300 2930 who will advise you on the best course of action.