The final remaining unrated professional indemnity insurer has been ordered to stop writing any new business after suffering a financial collapse.
The Gibraltar Financial Services Commission said today it has intervened in the operations of Enterprise Insurance Company PLC after being informed that the business was insolvent and unable to secure additional funding.
Enterprise was an important partner for many small and medium-sized law firms and was the last unrated firm to offer insurance to the solicitors indemnity market.
In a statement, Enterprise said it was ‘committed’ to keeping its policyholders informed. The Solicitors Regulation Authority said that currently policies remain valid.
The Gibraltar Financial Services Commission, which is led by former SRA director Samantha Barrass, said it was taking steps to issue winding-up proceedings with the cooperation of Enterprise.
It is the intention to issue an application for the appointment of a provisional liquidator.
The company has been under supervision from the regulator in recent months due to concerns about its financial position and has requested an independent review of its status.
Peter Taylor, director of legal, enforcement and policy, said the commission initiated action against Enterprise at the beginning of this month.
He added: ‘The company has endeavoured to find a way out of its predicament but has not been able to do so. Once we had seen the outcome of the independent review of Enterprise’s position Enterprise advised the commission it was insolvent.
‘We have moved very quickly to ensure that we take all reasonable steps to safeguard the position of existing policyholders. This is an inevitable but unfortunate outcome for all concerned.’
Enterprise said existing policyholders will be given more information in due course, but for now their policies remain in force.
Any existing claims will be considered following the appointment of a provisional liquidator.
The situation surrounding Enterprise bears striking similarities to that of Lemma Europe Insurance Company, an unrated insurer wound up in 2012.
In that case, Gibraltar’s FSC said it had been forced to act to protect policyholders by seeking the company’s liquidation after shareholders refused to contribute extra capital.
It is not certain how much business Enterprise wrote last year, but in the 2014/15 financial year the firm had around 1.4% of the entire solicitor PII market.
In a statement on Tuesday, the Law Society said firms holding a PII policy with Enterprise are not required to take any action at this stage, and should continue to notify claims in the usual way.
Anyone insured with Enterprise, or concerned about previous years when they had a contract with Enterprise, should contact the broker through which cover was arranged in the first instance.