In 2010 there was Quinn Insurance in Ireland, In 2011 there was Lemma (Gibraltar based Insurer for UK Solicitors) and now in 2013 another Insurer, Balva has stopped taking on new business.
Balva is perhaps best known outside of its home market in Latvia for its underwriting of UK Solicitors’ Professional Indemnity (PI) insurance on an unrated basis. It has a 7% share of the UK Professional indemnity Market, amounting to approximately £16m in Premium.
As recently highlighted in the June edition of the UK Law gazette, Latvian regulators have withdrawn all the operating licenses of Balva, effectively putting the company into “run-off”.
The UK Solicitors Regulation Authority (SRA) has said it is monitoring the situation and obtaining advice as to whether the developments would lead to an “insolvency event”.
This would require law firms currently insured by Balva to obtain replacement cover or else drop into the Law Society’s Assigned Risks Pool.
Security of Insurer…
Every insurance policy is only as good as the paper it is written on so the financial security & stability of your PI Insurer is of paramount importance.
Our focus in this article is to heighten your awareness of the importance of considering whether your PI Insurer will not only be there for you, but more importantly be in a financially stable position to meet claims if and when claims arise.
Certain Insurers have been operating in the Irish Solicitors Professional Indemnity Insurance market for many years, and despite market cycles, appear firmly committed to remaining here. Other insurers have come and gone after a short span of time.
It’s apparent from recent events in the UK PI Insurance Market that your choice of Insurer should be driven not only by competitive pricing, but also by their financial Stability and Commitment to the Market in general.
The Law Society in Ireland has stated : “The Society is not responsible for policing the financial stability of any insurer. The Society does not vet, approve or regulate insurers”.
Whilst a compensation Fund does exist in the event of an Insurer Insolvency, there are limitations to this fund and a cap applies to any claim being paid by the fund – So in theory there could be recourse to the firm in the event of insufficient funds to meet a claim or claims.
The issues facing some policyholder in the UK Solicitors PI insurance market at the moment could arise here in Ireland.