On Thursday 1st April what would otherwise have been a really bad April fools joke was confirmed as a reality. The Financial Serivce Authority announced that Quinn the Irish Insurance company had been placed into administration. An application to the High Court and appointment of two joint adminstrators signalled risk for many solicitors firms.
The Irish Authorities are reported to have indicated that all existing policies will be covered.
Whist the Law Society of England and Wales hurriedly made announcements regarding its urgent actions to review the situation and that all claims should be honoured as the business is not insolvent insurance industry insiders said that the 2400 firms that are covered by Quinn should be very concerned as the firm may yet become insolvent meaning that there would be no funds to pay claims.
Quinn has not benefitted from a security rating (the financial measure of an insurance companies strength) for some time and those solicitors that purchased insurance through Quinn should have considered this in their purchasing decision.
Quinn took a large market share of smaller firms of solicitors last year often working in sectors where no other insurance provider was prepared to offer cover.
When Independant Insurance the UK insurer went insolvent a few years ago no legal firms that were insured by them had to purchase new insurance polcies if they wanted cover. In this case such a turn of events would raise questions as to the impact on other solicitors taking undertakings from solicitors insured by Quinn and also whether the Assigned Risk Pool has the financial strength to deal with this issue.
Hopefully Quinn will be able to trade out of administration or be sold but this development does make the next insurance round which is only 6 months away significantly more challenging for many firms.