The collapse of insurer Balva has prompted warnings against unrated insurers, but some clients cannot afford to be picky
Latvian insurer Balva collapsed this week. The usual chorus could be heard, warnings about using unrated insurers, but the problem is that some brokers have little choice but to go with unrated carriers.
This is especially true with solicitors’ professional indemnity, where 12.5% of premiums go to unrated insurers. Sometimes, for a number of reasons, the client cannot obtain insurance with any other provider. Alternatively, clients opt for an unrated insurance provider because of price, in full awareness of the associated risks.
And, to an extent, why shouldn’t they? If an unrated carrier has operated in the market for many years without problems, that shows there is some level of stability.
The greatest risks are held, of course, by the newly set up unrated carriers. Ultimately, trading with an unrated carrier is a gamble but, for some, it is simply a risk worth taking.
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