The Solicitors Regulation Authority (SRA) has proposed a number of changes to law firms' insurance arrangements in the run-up to the introduction of Alternative Business Structures (ABSs) next year.

Following an independent review commissioned by the SRA this summer, the regulator is now proposing to remove the single renewal date for professional indemnity insurance (PII) and allow renewal at any time of the year.

The regulatory body is also looking to reduce the amount of time firms are permitted to stay in the Assigned Risks Pool (ARP) – which caters for firms which cannot get cover or afford the terms available to them – from 12 to six months.

The review, carried out by consultancy Charles River Associates, will now be examined in more detail by the SRA until 28 February 2011, with all agreed changes set to be implemented in October 2011.

SRA chief executive Antony Townsend said: "Although the current insurance arrangements provide excellent financial protection for clients, there is a widespread acknowledgment that they create an annual crisis for many law firms at renewal time, that they are not sufficiently focused on the particular risks of each firm's practice, and that they are not fit for purpose for the changing legal services market."

The SRA is also considering whether firms entering the ARP should be forced to give details of why they were refused insurance in the open market, with insurers potentially asked to provide information about firms that fail to pay their premiums or that they believe may have misrepresented information.

Berrymans Lace Mawer senior partner Terry Renouf (pictured) said: "It is important for the SRA to review professional indemnity insurance and the issues surrounding it in the wake of the recession that has made it clear there is no one-size-fits-all solution anymore. Firms need flexibility on things such as when it is appropriate for them to renew their insurance every year.

"It is also important in light of the introduction of ABSs – the SRA has to anticipate necessary change to these kinds of policies."