Enterprise Insurance Update, 23 August
Solicitors Regulation Authority
Around two-thirds of firms that had professional indemnity cover with the now insolvent Enterprise Insurance have reported that they have secured new policies, with most other firms reporting progress in getting a new policy in place.
Enterprise was declared insolvent by the Gibraltar Financial Services Commission (FSC) in July and those firms that had existing policies had 28 days to find a new insurer. That period ended yesterday.
The Solicitors Regulation Authority (SRA) has now put on notice those firms who have not yet got a new policy in place. The SRA is putting these firms on an individual action plan to secure a new policy as soon as possible.
Crispin Passmore, SRA Executive Director of Policy, said: "Proper insurance not only protects consumers, it also benefits the firm and profession. We have been working closely with affected firms to make sure they secure cover and keep both existing and potential clients aware of the situation.
“The good news is that, within a short space of time, two-thirds of firms have reported securing new cover, with most others well into the process of getting something in place. We will continue to take a constructive approach with those who don't have a new policy, but are being absolutely clear about their responsibilities and the need to move quickly.
"We are looking at each firm on an individual basis and putting them on an action plan. If we do not see evidence of progress, we will then need to take further action.”
Enterprise has been providing cover since 2011, so there are firms other than those with live policies that have open claims. All claims will now be dealt with by the liquidator with the support of the FSC.
The UK Financial Services Compensation Scheme (FSCS) has confirmed that if it establishes Enterprise cannot meet the cost of claims made against it, it will protect UK policyholders if they meet certain eligibility criteria. For example, this is for UK policyholders who are individuals or small businesses with a turnover of less than £1 million and who have professional indemnity insurance.
There will also be firms that have closed during this period, who might have run-off insurance with Enterprise. The SRA has made all firms aware that there is a risk that the liquidator might disclaim the policies.
Previous SRA statements are available here:
July 25: http://www.sra.org.uk/sra/news/press/enterprise-insolvency-information-july-25-2016.page
July 27: http://www.sra.org.uk/sra/news/press/enterprise-insolvency-information-27-july-2016.page
August 2: http://www.sra.org.uk/sra/news/press/enterprise-insurance-information-2-august-2016.page
August 19: http://www.sra.org.uk/sra/news/press/enterprise-insurance-information-19-august-2016.page
