PI insurer’s collapse raises question mark over claims
The Law Society has urged former clients of the collapsed Lemma Europe insurance company to seek advice from their broker as soon as possible.
Last week, the Supreme Court of Gibraltar appointed a provisional liquidator to establish the financial position of Lemma after the company had been wound up.
The firm was not a qualified insurer for the 2012/13 solicitors professional indemnity market, which closed today, but had written more than £6.2m of cover to law firms in 2010. Solicitors will be concerned at the insurer’s ability to settle claims which are not yet settled or claims against firms that are in run-off – potentially with four years left to run in some cases.
The Solicitors Regulation Authority said one firm had insurance with Lemma from 2011/12 and it had been given extra time to find a new insurer.
Elliott Vigar, head of regulation at the Law Society, said: ‘The position is not yet clear as to Lemma’s ability to meet current or future claims going forward.
‘Firms should seek advice from the broker that they used to secure coverage as to their current position in regard of unmet claims and as required contact the Financial Services Compensation Scheme to determine whether or not the scheme can assist them.’
In a statement, Gibraltar’s Financial Services Commission said it had been forced to act to protect policyholders by seeking the company’s liquidation after shareholders refused to contribute extra capital.
One of its major reinsurers and sister company, Joint Stock Insurance Company Lemma, had also stopped all reinsurance claims payments. The statement added: ‘This has placed Lemma Europe’s finances on an unviable footing.
‘The provisional liquidator has been granted very wide powers by the court, and this will enable him to do whatever he considers necessary to protect the interests of policyholders.’
No one at Lemma was available to answer the Gazette’s enquiries.
Comments
Qualifying Insurers
Why is the SRA continuing to allow overseas insurers to be Qualifying Insurers? Why does it seem unsure about the applicability of the FSCS? If there is doubt about the applicability of that scheme, why was Lemma allowed to write solicitors' policies in the first place? I suppose the SRA will trot out the "It's not our role to vet insurers" excuse, as it did with Quinn.
Will this spark a review of
Will this spark a review of ATE providers who are similarly placed, I wonder?
Their failure would lead to significant client exposure.
Should best advice be "don't take the risk"?
Does the SRA have a duty of care
Correct me if I'm wrong, but doesn't the SRA compile the list of "qualifying insurers?" If this is the case, then doesn't it assume a duty of care to make sure that the insurers are ones of reasonable standing?
More double standards SRA
More double standards
SRA picks on the small to medium legal sector with threats and intimidation and seeks to be a FSA type regulator but disclaims all responsibility when things go wrong.
I read somewhere that it struggles to come to terms with how it can regulate the big firms so it concentrates instead on enforcing its misguided policies on the small to medium legal sectors which can barely afford the resources to become COFAS COPLS ORCS etc etc.
Me on Mon - for the same
Me on Mon - for the same reason that Gibraltar has more lawyers per capita than any other country in the world!