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Balva: learning the unrated lesson the hard way

The collapse of Balva will make many smaller firms weigh up the benefits of staying in business compared with the risk of potentially very significant personal liability, says Jason Nash

2 July 2013

Earlier this month news broke that Balva, a Latvian insurer and provider of professional indemnity insurance to 1,300 smaller law firms, faced possible insolvency. The Latvian regulator has withdrawn all Balva's operating licences which will in all probability trigger either an insolvency event as defined by the SRA Indemnity Insurance Rules or a (solvent) voluntary winding up. This has come to no surprise to those involved in the solicitors' professional indemnity market and was widely predicted.

Already, law firms affected are reportedly being offered alternative insurance through another unrated insurer - Berliner Versicherung Aktiengesellschaft. "Firms who elect to go with unrated cover should be under no illusions as to the potential risks that flow from that decision, both to the viability of that firm a...

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