Law firms in the Assigned Risks Pool still owe £8.46 million in premiums, despite debts falling during 2011.

Outstanding premiums have come down from £9.3 million at the end of March this year as regulators clamp down on non-paying firms.

The Solicitors Regulation Authority and ARP manager Capita have put in place a number of sanctions to deal with those who continue to fail to pay their premiums.

Firms have been written to and visited, and advised they have until the end of this month to make all outstanding payments in full.

Capita is also pursuing individuals to bankruptcy if they do not clear their debts, a process supported by the SRA.

In a report to the SRA board, the regulator emphasised there could be little room for leniency when it came to firms in arrears.

‘We accept that in some cases it may not be commercially worthwhile to collect the outstanding premiums, but that is not the case for the majority of firms and principals,’ said report author Mike Jeacock.

‘In these cases, efficient and swift premium collection must be encouraged. The SRA can only create a credible deterrent against premium default, and reduce the risks to consumers, by taking regulatory action - and publishing the outcomes of that action - against firms.’

Of the 236 firms covered by the ARP, 140 have now paid their premiums in full, leaving a further 96 with outstanding debts. Of those, 96 have made some payment but 30 have not even started to settle outstanding bills.

In total, 138 firms that were in the ARP have closed in the last two years, 19 of them through intervention.

The number has fallen in the last 12 months, from 73 in 2009/10 to 46 in 2010/11.

Most firms have chosen to close down in what the SRA calls an ‘orderly fashion’, recognising they are unable to pay their premiums or unlikely to secure insurance on the open market in the next renewal period.