The insurer says it should be given ‘special consideration’ because it is backed by ‘A’ rated reinsurer Greenlight
Unrated Danish insurer Alpha has asked the Yorkshire Building Society (YBS) to reconsider its demand that all solicitors on its conveyancing panel have a minimum B+ rated carrier by 1 October.
YBS said last month its decision was prompted by the recent collapses of professional indemnity insurance (PII) companies Quinn and Lemma.
Alpha writes solicitors’ PII business in the UK through a binding authority arrangement with underwriting agent Indemnity Risk Solutions (IRS). It said it should be given “special consideration” because it is backed by AM Best ‘A’ rated reinsurer Greenlight.
In the 2013/14 indemnity period Alpha wrote £16.5m in premium for 1,380 policyholders, giving it a 6.5% market share.
Under the terms of its ‘quota share’ reinsurance arrangement, Greenlight reimburses Alpha 90% on all valid claims payments, including costs.
And if Alpha became insolvent, Greenlight would continue to honour its obligations.
Alpha Group chief operating officer, underwriting, Jakob Olsen told Insurance Times that while he understood the reasons behind YBS’s decision, he did not think it was fair to label Alpha in the same way as the failed insurers.
“Being backed by an ‘A’ rated reinsurer enhances the quality of the credit risk the policyholder has against us, so that even if we fail, the effect of that will merely be 10%,” he said.
“Ninety per cent of the risk is held by an ‘A’ rated reinsurer, which means it offers strong security to policyholders.
“If you consider what has happened, some measures have to be put in place to ensure the quality of the carriers – to be sure that those who offer these insurances can pay the claim.
“But what we have done is to try and explain in the market what we are about, compared to those that have caused this whole calamity.”
IRS has also written to 70-plus brokers about Alpha’s reinsurance arrangement to allay clients’ fears.
A YBS spokesperson said it could not comment on individual cases but reaffirmed its position that all applicants to its conveyancing panel should take out insurance with a rated insurer.