The administrators of Quinn Insurance have recommended that the Irish insurer’s professional indemnity insurance (PII) business in the UK should close for good, the Gazette has learned.

Administrators Grant Thornton told the Gazette that in their proposals to the Irish Financial Regulator, which regulates Quinn, they have recommended that Quinn’s UK PII business should remain closed because it is not profitable.

Grant Thornton and the regulator have yet to announce a formal decision on the matter, but if the proposals are followed, the 2,911 law firms and sole practitioners with Quinn PII policies would not be offered renewals, and would have to seek cover from other insurers during the 2010 renewals season.

A Grant Thornton spokesman said that the decision to cut Quinn’s UK PII business would not affect existing policyholders, all valid claims would be paid and that there would be no implications for run-off cover.

On 30 April, the board of Quinn Insurance’s parent company, Quinn Group, announced that it ‘should consider selling Quinn Insurance’. The Grant Thornton spokesman said that, under the administrators’ plans, Quinn Insurance’s UK PII business would not form part of any potential sale.

The closure of Quinn’s UK PII business could have important implications for all small firms and sole practitioners once this year’s renewals season begins. Over the last two years, a number of major PII insurers have decided to stop insuring firms with fewer than 10 partners, while others have hiked their premiums. Quinn predominantly insured smaller firms.

The Financial Regulator declined to comment specifically on any of the administrators’ proposals, but said that it ‘may not be ultimately possible’ to reopen Quinn’s UK PII business.

A Quinn Insurance spokeswoman said: ‘Quinn Insurance and its administrators, with the Irish Financial Regulator, continue to review all of its UK business lines with a view to reopening profitable segments. All options are being reviewed in respect of [PII] and a decision will be made with regard to this segment prior to the renewal of policies in autumn 2010.’

At Grant Thornton’s recommendation, and with the regulator’s permission, Quinn Insurance staged a partial reintroduction to the UK insurance market, limited to insuring learner drivers, after the regulator banned it from writing new business on 30 March – but its UK PII business remained shut.

The Law Society said it was working hard to ensure the 2010 renewal worked well and a great deal of help would be available to solicitors. See www.lawsociety.org.uk.