Hundreds of firms have been told they do not need to seek fresh insurance cover despite the collapse of their indemnity insurer. In a notice published this week, the Solicitors Regulation Authority said policyholders of CBL Insurance Europe dac will continue to be covered, although they cannot obtain a new policy with the company.
Last month, the Central Bank of Ireland announced that the firm had been placed into provisional administration. The bank had already instructed it to cease writing any business until further notice.
It is understood that around 200 England and Wales firms are covered by the Dublin-registered company.
The Central Bank said that the business has failed to make adequate provision for its debts, including contingent and prospective liabilities, and is unable to comply with its regulatory requirements.
Administrator KPMG was appointed to assist in the maintenance of the ‘properly and orderly’ regulation and conduct of its insurance business.
Although existing policies remain in force, the Central Bank recommends that policyholders contact the firm directly, or their broker, to arrange alternative cover as soon as possible.
The SRA said: ‘As was the case with a similar situation in 2010, an administration order under Irish legislation does not constitute an "insolvency event" under the SRA Indemnity Rules 2013. There is, therefore, no requirement at this stage for firms insured with CBLIE to seek replacement qualifying insurance within 28 days.’
The regulator will continue to monitor the situation and will advise of any significant developments or change in its view.
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