Daily briefing: Tuesday - Unrated PI insurers cause concern

The Solicitors Regulation Authority (SRA) has been holding talks on unrated insurers writing UK solicitors’ professional indemnity (PI) business. This is an issue that has prompted much discussion and taken up a lot of newspaper column inches recently.

Concerns over unrated insurers focus on what would happen if things went wrong. A lot of the most vocal parties are brokers.

“Once you have unrated companies coming in, you have the danger that you might end up with an insurer going bust, which isn’t protected by the Policyholders’ Protection Fund. Then you’ve got a situation where you’ve got a lot of people out there who are uninsured,” said Affinity Select Insurance Services’ director Jenny Carter-Vaughan. “I think that’s very dangerous, to be honest.”

Overrated

The initial proposal is for the SRA to publish the rating status of all qualifying insurers.

However, some brokers believe this would not tackle the problem.

“If you’re a regulated broker, you’ve got an obligation to make these statements, so your client will already know this, because 95% of solicitors’ business is intermediated,” one broker said. “They would just be informing their buyers of one more piece of information.”

Although there are signs that the SRA will reach a formal decision soon, it has made no such decision yet, so things could still change.

But any serious change would need to come from a Financial Services Authority decision, as the SRA still stresses that it cannot regulate insurers.

Though the gate

David Partington is the latest senior employee to resign from Towergate. There are no signs yet of where the Towergate Broking managing director will be off to.

Partington was highly regarded both inside and outside Towergate, and was hard-wired in to the Towergate branch offices.

Mark Hodges now has an additional big task on his hands of finding a replacement in a talent pool that is restricted by all accounts.