Fate of Quinn Insurance hangs in the balance
More than 2,900 law firms and sole practitioners could be left without professional indemnity insurance (PII) on Monday when the Irish High Court decides the fate of Quinn Insurance, the Irish insurance company that was forced into administration last week. Quinn covers around 10% of the solicitors’ PII insurance market.
The Irish Financial Regulator, which regulates Quinn Insurance, has petitioned the court to appoint a permanent administrator to Quinn Insurance. If the court accepts the Financial Regulator’s arguments, solicitors holding Quinn policies will almost certainly have to buy new policies with other insurers, or enter the assigned risks pool (ARP), within four weeks
The Irish High Court placed Quinn Insurance in provisional administration on 30 March following a petition by the Financial Regulator. Administrator Grant Thornton is understood to be delivering a financial report on Quinn Insurance to the regulator today, which will be presented in court on Monday.
The Solicitors Regulation Authority has advised firms with Quinn policies to sit tight pending the outcome of Monday’s hearing. It is understood that Grant Thornton has told the SRA that Quinn has sufficient financial reserves to pay claims on PII policies, but an SRA spokesman could not confirm this.
Martin Ellis, head of the solicitors’ practice group at broker Prime Professions, which provides 1,900 sole practitioners with Quinn PII policies, said: ‘If a new policy has to be put in place, then insurers aren’t going to do it for nothing.’ However, he predicted that policies would be allowed to run until 30 September regardless of the outcome of Monday’s hearing.
A spokeswoman for PYV, another major Quinn broker, said that PYV is advising clients in line with the guidance of the Financial Regulator and SRA. ‘As an independent broker, we are not tied to any one insurer,’ she said.
An SRA spokesman said that Quinn policyholders could be given a time extension to find alternative policies if necessary.
Grant Thornton and the Financial Regulator have been analysing financial guarantees, estimated to be worth €448m (£394m) altogether, set up by subsidiaries of Quinn Insurance. The guarantees are alleged to have been used inappropriately to set off debts from other companies that make up the Quinn group conglomerate.
Quinn Insurance said last week that the guarantees were fully disclosed in the accounts of its 24 subsidiaries, but the Irish Independent claimed this week that the existence of the guarantees was disclosed in the published accounts of just one Quinn Insurance subsidiary, Quinn Logistics, with no indication of their value. Quinn said this week that the guarantees were contained in the filed accounts of eight Quinn Insurance subsidiaries, to which the Financial Regulator has full access, and that the guarantees are worth less than €448m.
Solicitors’ rules state that law firms must find alternative cover or apply to enter the ARP within four weeks if an insurer has provisional administrators appointed. However, the SRA said that the concept of ‘provisional administration’ as determined by the Irish High Court in the Quinn case falls outside the definition in its rules.
Meanwhile, SRA figures show that £33m worth of claims are currently filed against law firms in the ARP, the insurer of last resort for firms unable to obtain PII on the open market. Some £5.5m is due in premiums from ARP firms, but just £2m has been paid to date.
Read previous articles on Quinn Insurance:
Comments
Quinn
Too punch drunk to care anymore?
Solicitors Insurance
It's very unlikely that Quinn will be allowed to go as too many businesses rely on it. This businesses have employees and without jobs the state will have to look after them.
Solicitors have been struggling with insurance for years. We need more underwriters, improved systems for ensuring claims don't happen and to do away with the renewal date that is the same for all solicitors.
Take care,
Jason Cobine
The problem with premiums is
The problem with premiums is that they are substantially increased by the small minority of solicitors who are downright . We know who they are are and the country they usually qualify in so why do we allow them to practice over here? Or is it politically incorrect to speak the truth nowadays?
... downright fraudulent.
... downright fraudulent.
the above remark does not
the above remark does not suggest that Quinn are downright fraudulent! I missed a work off my orginal comment so I reposted the phrase without thinking. Please please please do not sue me!
Little choice ....
...and with experirence ....beware of Travellers who will use any means to get their work done and save law firms..... Surely an astute judge is going to wake up very soon to their tactics and smell the coffee.
Door opened for exploitation and blackmail of insured
The consequences of the recent decision has opened door for exploitation and blackmail of the victim firms in the saga
I think the Gazette has done
I think the Gazette has done a good job on this important story -search against Quinn on the Gazette website to find earlier stories and the numerous comments.
Panic may be premature - and those insured with Quinn will be following the story in the Irish press -google irish times quinn insurance to get the latest eg
State-owned Anglo Irish Bank tonight moved to strike a deal with the Financial Regulator to secure the takeover of a beleaguered insurance firm at the heart of the Quinn Group.
Quinn Insurance, owned by tycoon Sean Quinn, once the country’s richest man, is in administration after the watchdog raised concerns over its ability to pay an influx of claims.
Talks are expected to run over the weekend between regulator Matthew Elderfield and executives at nationalised Anglo after the bank tabled the bold bid based on securing debts and refinancing the firm.
Taoiseach Brian Cowen said there were concerns over jobs at the wider group but negotiations were being held to assess the plan before a High Court hearing on Monday.
It is understood Minister for Finance Brian Lenihan will accept the regulator’s verdict on the proposed buy-out.
Quinn Insurance
As from Monday should all solicitors, and others having dealings with solicitors, ask for proof of up-to-date insurance cover and details of their insurers? I would not want to be in the process of purchasing a property and find that the deposit had been placed by my solicitors in the hands of a firm insured by Quinn, or not insured at all. In fact I would consider them to be negligent if they did so. The problem then becomes that the very refusal to deal with Quinn insured firms would guarantee their downfall.
A solution might be to return to a system like SIF. This was far from ideal in a number of respects, but at least clients were protected and their claims met, sometimes too readily. The major problem with SIF was that they kept paying for firms where a pattern of claims, and the sums involved, should have seen that they were closed down. SIF should have had a system of warnings accompanied by increasing excesses and then refused them cover. This would ensure that delinquent firms were not subsidised indefinitely by the rest.
As for the present, insurers are going to have a field day charging what they want to cover Quinn insured practices who they well know will have no choice other than to pay up or go out of business. In fact the latter alternative is not as bad as it sounds as they will no longer have those sleepless nights we all suffered from when in practice.
David Crawford (Retired, thank God!)
Indemnity insurance
This has become the Wild West, hasn't it? At least with a single master policy we (and our clients) all knew where we were.
I see nothing wrong with saying to a firm that has had too many proven negligence claims 'sorry, old boy, but you're not up to the job - no cover and find some other way to make a living'.
Quinn Insurance
I agree with the previous comments. The profession should encourage the Law Society urgently to investigate the re-introduction of a mutual PI insurer similar to SIF.
Eighty-five per cent of firms have fewer than 4 partners and it is these firms who have suffered escalating indemnity insurance premiums during the last two years. Some of these firms have gone to the wall because of their inability to find an insurer. It is in these firms where a substantial amount of the work undertaken is residential conveyancing. This work we are informed by the insurance industry is beset by claims. It makes up 52% of all PI claims against the profession and uses up 49% of the pooled insurance premiums--apparently?!!
At the end of the 1990’s the profession voted to wind up SIF. It was many of the smaller firms who voted to end SIF because the premium structure favoured large firms and did not reward those firms who had exemplary claims records with a “no claims” bonus. Under SIF we knew how many claims there were across the profession, how much was paid out in a year and how many unsettled claims needed to be dealt with the following year. SIF produced a report. These days this information is not so readily available from private insurance companies and we are in the dark.
Had the premium structure been fairer SIF probably would still exist today. If many of the sole practitioners who insure with Quinn cannot obtain cover in October this will cause major insurance problems for the rest of the profession. The Law Society or its members will be required to put its hand in its pocket again to deal with the crisis which means we all pay.
How about a new SIF funded on a "pay as you go" premium basis ?-- say £70 premium per conveyancing job thus taking the risky work out of the insurance market.The more jobs you do the more you pay. All very fair. It would also stop the sometimes ludicrous low fee quotes from some firms who cannot possibly have costed their work properly and would mean the premium could be passed to the client as we do with contingency insurance.
Richard Robson (Property Solicitor 30 years practice--fortunately not with Quinn!)