The Legal Services Board has today refused the Solicitors Regulation Authority's proposed reduction in the minimum level of professional indemnity insurance cover from the current level of £2m to £500,000.

The proposal had been designed to cut costs for the profession whilst creating more flexibility in the market but met strong opposition over the speed of change and lack of consultation with insurers. The proposal had initially been intended to take place ahead of the October 2014 renewal.

The Legal Services Board has instead accepted the SRA's proposal to add a new outcome to the SRA's Code of Conduct 2011 requiring firms to assess and purchase an "appropriate level of professional indemnity insurance".

Chris Kenny, chief executive of the Legal Services Board, said:

"What matters is that firms have the right incentives to assess their risks accurately and so ensure that consumers are protected. It is not clear to the Board that a minimum level of cover necessarily has a place in achieving that and we were certainly not persuaded by the evidence put forward for the figures proposed."

The SRA's chief executive, Paul Philip, has referred to the decision as "disappointing", and said that the SRA would be "considering the correspondence carefully before commenting further."