Solicitors reassured over Quinn PI policies

The Solicitors Regulation Authority and the Law Society have reassured UK-based solicitors with professional indemnity policies underwritten by Quinn Insurance that they do not need to take action, for now.

The move comes after the high court appointed permanent administrators to the Irish insurer yesterday.

The SRA said in a statement: "The SRA understands that this type of administration under Irish insurance legislation does not appear to amount to an insolvency event for the purposes of the Solicitors' Indemnity Insurance Rules in England and Wales. Therefore, there is no requirement at this stage for firms insured with Quinn to seek replacement Qualifying Insurance. We will continue to monitor the situation closely and will advise the solicitors' profession of any significant developments or change to our view."

The Law Society said: "Our view is that the making of the particular type of administration order concerned by the Irish Courts under the particular piece of Irish legislation concerned is not a direct equivalent to an administration order made here in England and Wales. The type of administration order concerned, which has been sought and obtained on the application of the Irish equivalent of the Financial Services Authority, appears to be more akin to a regulatory intervention in a business and is intended to maintain the business as a going concern."

It continued: "This does not automatically mean that an insolvency event for the purposes of the Solicitors' Indemnity Insurance Rules has occurred. It is the Solicitors Regulation Authority (SRA) that will determine this issue. Until it does, please bear in mind their continuing recommendation that firms should take no action at present."

The Law Society added: "Even if the confirmation of the administration order does amount to an insolvency event it may be open to the SRA to exercise its discretion to grant waivers of its rules. Clearly, this, a matter for the SRA, will be highly dependent upon all of the facts available.

"Equally firms will wish to keep these matters under careful and close review since as, as today's [April15] events confirm, matters could move quickly.

"For our part the Society is constantly monitoring these matters and is in close contact with all appropriate stakeholders."

It warned solicitors not to act after a broker wrote a letter to Quinn Insurance customers saying “there remains the possibility that provisional administration will be either set aside or confirmed. In the latter event Quinn would cease to be a qualifying insurer and its insured firms would have to seek cover from another qualifying insurer within four weeks...”

The Society said it did not think the position is as clear cut as the broker's letter sets out and urged policy-holders to await further developments and guidance before taking any action.