More than 10 firms covered by collapsed insurer Enterprise face closure by the Solicitors Regulation Authority after failing to secure new indemnity policies.
The 43 firms that had professional indemnity insurance (PII) with Gibraltar-based Enterprise Insurance had 28 days from the time Enterprise was declared insolvent last month by the Gibraltar Financial Services Commission to arrange alternative cover.
The deadline was yesterday.
In its latest update on the situation, the SRA today said that around two-thirds of firms have secured new policies. Most other firms have reported ‘progress’ in getting a new policy, the regulator said. However, it has ‘put on notice’ those firms that have not yet secured fresh cover.
SRA executive director of policy Crispin Passmore said: ‘We have been working closely with affected firms to make sure they secure cover and keep both existing and potential clients aware of the situation.
‘We will continue to take a constructive approach with those who don’t have a new policy, but are being absolutely clear about their responsibilities and the need to move quickly.
‘We are looking at each firm on an individual basis and putting them on an action plan. If we do not see evidence of progress, we will then need to take further action.’
Enterprise has been providing cover since 2011, so there are firms other than those with live policies that have open claims, the regulator said. All claims will now be dealt with by the liquidator with the support of the Financial Services Commission.
It added: ‘The UK Financial Services Compensation Scheme has confirmed that if it establishes Enterprise cannot meet the cost of claims made against it, it will protect UK policyholders if they meet certain eligibility criteria.
‘For example, this is for UK policyholders who are individuals or small businesses with a turnover of less than £1m and who have professional indemnity insurance.’
The regulator noted that there will also be firms that have closed during this period that might have run-off insurance with Enterprise.
‘The SRA has made all firms aware that there is a risk that the liquidator might disclaim the policies,’ it added.