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Fears over Quinn administration

16 April 2010

Both the Solicitors Regulation Authority and the Law Society have sought to calm the profession in the wake of the announcement that Irish insurer Quinn had officially fallen into administration in Ireland.

An earlier court order placing the insurer in provisional administration unleashed fear among the near 3,000 smaller English firms that took professional indemnity insurance with the company.

The SRA gave them temporary relief yesterday when it indicated in a statement the following day that it did not regard the decision as an “insolvency event” for the purposes of indemnity rules. Had it been the case, firms insured with Quinn would have had four weeks to secure alternative cover or apply to the assigned risks pool.

But the decision could store explosive problems as the October renewal date approaches. Solicitors Journal understands that Quinn’s forms were significantly shorter than those of other insurers, suggesting questions were possibly not as in depth. Come September, firms with difficult claims records could therefore find it particularly challenging to obtain cover elsewhere as they are forced to disclose their history in greater detail.

Only last week, Frank Maher, partner at LegalRisk LLP, told solicitorsjournal.com that Quinn’s collapse could precipitate applications by hundreds of firms to join the assigned risks pool. “The resulting expansion of the ARP could put its very existence in peril,” he said.

At an emergency hearing earlier in the week (see solicitorsjournal.com, 13 April 2010) the High Court in Dublin agreed to postpone its final decision and gave Quinn the opportunity to put forward arguments against the appointment of administrators.

A new hearing date was scheduled for Monday 19 but on Thursday 15 April the insurer dropped its objections to the Financial Regulator’s application that the company should be placed into administration. Grant Thornton, initially appointed provisional administrators on 30 March, are now permanent administrators.

The accountancy firm will work with the regulator to assess the viability of Quinn as a going concern.

The Irish Times has suggested that Quinn would not seek to re-enter parts of the UK insurance market, including solicitors’ indemnity insurance.

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