It is now some years since we experienced the carnage of solicitors’ professional indemnity insurers failing between 2010 and 2018, with Quinn, Balva, ERIC, Berliner, Lemma, Elite, Alpha, Enterprise and CBL in turn becoming insolvent and causing lasting damage.

20 years have passed since the Insurance Company Failure report by Roger Massey and others which followed the collapse of Independent Insurance.

The Property and Casualty Insurance Compensation Corporation (PACICC) in Canada has released the latest report in its series on insurance company failures, reviewing four examples, including CBL, whose subsidiary CBL Insurance Europe dac (CBLI), registered in Ireland, insured a small number of solicitors in England & Wales. Like a number of the other insurers listed above, CBLI was also active, through a subsidiary, in the provision of decennial liability (builders’ warranty) insurance in France, which has experienced many of the same problems affecting the solicitor market in England & Wales and involved many of the same insurers.

The latest PACICC report, as in previous years, identifies the causes of failure as internal operations, including governance and inadequate capital management, complex organisational structures and adequacy of regulatory oversight, but has now added natural disasters to the list.

While the risk of failure in the solicitor market is now far less than it was, and there are now no unrated insurers providing primary cover to solicitors, some are more secure than others. A recession may result in a spike in claims, as recessions have in the past, but the indirect aspect of insurers’ exposure to the risk of natural disasters should also be added to the melting pot.

We are still receiving new instructions from law firms which have faced claims which should have been covered had their insurers been solvent. In a number of cases we have identified other avenues for securing indemnity.

We are also providing legal advice to solicitors and professional service firms in several other cases where there are coverage issues on substantial claims and where insurers’ panel firms are conflicted.

For advice contact [email protected].

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