Hundreds of firms affected by the Balva insurance crisis have been dealt another blow just weeks before the professional indemnity insurance renewal deadline.
Apro Management, which manages Berliner, which was due to take on most of Balva’s business, wrote to policyholders yesterday warning the firm is unsure whether it can accept any solicitors’ PII this year.
The letter states there is uncertainty as to whether Berliner will be in a position to accept any solicitors’ PII risks for the year beginning 1 October.
Premiums already received will be held in a separate client account while the company seeks to resolve the situation.
‘Until further notice, we reiterate that we are not in a position to accept any premium monies in respect of 1 October 2013 and customers should consider making alternative arrangements for cover,’ the letter states.
Around 1,300 law firms who were covered by unrated Latvian professional indemnity insurer Balva were given the offer to transfer policies across to Berliner in June. The Gazette understands the majority of firms affected chose to do so.
Berliner’s pull out leaves firms facing a race against time to secure insurance before the 1 October renewal date.
Frank Maher, partner for Liverpool firm Legal Risk, said: ‘There may be capacity with other insurers but it doesn’t bode well. Quite a lot of smaller firms face a bleak time looking for an insurer this month.’
Concerns were raised in June by the Law Society after reports that solicitors were being offered to transfer policies to Berliner by the same broker that previously sold policies from Balva.
The insurer captured 7% of last year’s professional indemnity solicitors market but faced insolvency after its operating licences were withdrawn by the Latvian regulator.
The Law Society warned of an ‘unrated cycle’ of firms as firms were forced to choose unrated insurers offering cheaper premiums.
The SRA confirmed it has written to all firms today to let them know arranging cover from 1 October is the most important matter for them.
Mike Perry, a partner at advisory and brokerage firm JLT, said affected solicitor firms should immediately start to look for alternative insurance providers.
‘The message is not to despair but to act fast,’ he said. ‘There are still insurers prepared to offer quotes and the idea that small firms must only go with unrated insurers is a myth. There are reasonable quotes out there from rated insurers.’
