You are here

Court forces Quinn into administration

6 April 2010

Quinn Insurance, the Irish company that has provided indemnity insurance to thousands of small firms in the UK, has been put into administration.

The decision to appoint joint provisional administrators was made by the High Court in Dublin on 30 March.

The move follows an application by the Financial Regulator, the Irish financial services regulation authority, after it became concerned about Quinn’s ability to meet its obligations to policy holders.

Quinn offers insurance services both in the consumer and professional markets, ranging from motor and household to indemnity insurance.

Under the court-based arrangement, Irish policy holders will continue to be able to renew policies, carry out new business and make claims in the normal way.

The situation is more difficult for Quinn Insurance Limited (UK), the UK arm of Quinn’s operation.

The Financial Regulator has directed the UK company to cease writing new business, although existing policy holders should not be affected.

“Existing UK policy holders will not be affected by this decision as existing policies will remain valid. Customers can make claims in the normal way,” it said in a statement.

“The effect of this action is to prevent Quinn Insurance Limited suffering further financial losses from its currently unprofitable UK business.”

The news could affect about 3,000 English law firms that took professional indemnity insurance with Quinn. It could have dramatic consequences if firms currently with Quinn cannot secure renewals with the company or find alternative providers when the time comes to renew PII in October.

Quinn entered the solicitors market two years ago, at a time where premiums started rising. Growing numbers of small firms and sole practitioners became unable to obtain insurance with mainstream providers.

To the surprise of many in the market, Quinn started offering policies to these firms and sought to carve out a substantial share of the market by offering aggressively-priced premiums.

If the situation worsens and Quinn cannot come out of provisional administration, English firms insured with the company could face closure or the prospect of falling into the assigned risks pool, in which there are still over 200 firms – the highest number since its creation.

Solicitors Journal understands that the downturn in the Irish economy is mostly to blame for Quinn’s predicament, although the Financial Regulator has also started an investigation “into certain matters that have very recently come to light”.

Nigel Day, managing partner at Hague Lambert in Manchester and chair of the Law Society’s indemnity sub-group, said it was too early to say how solicitors in the UK would be affected.

“My understanding is that the Irish regulator is looking at whether it is possible to keep the business going, so Quinn could even become a bigger player in the professional indemnity market,” he said.

The Solicitors Regulation Authority has recommended that there was no need for solicitors to take action until the situation is clearer. It said it will contact all policy holders directly if it turned out that action needed to be taken.

A spokesman for the SRA said it had only received a few calls about the matter so far.

Categorised in:

Financial services & Tax Wills, Trusts & Probate Courts & Judiciary