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.