Fund's 3,761 members may face scramble to find cover or end up in the assigned risk pool
The future of the Solicitors’ Mutual Defence Fund (SMDF) in Ireland hung in the balance as it struggled to find reinsurance on the London market.
The SMDF has warned members that it may not be able to indemnify them for the coming year because of a deluge of recession-related claims.
The fund’s brokers, Miller Insurance Services in London and Dublin-based JLT, are scrambling around trying to find cover for its 3,761 members.
Chairman Laurence Shields, in a letter to members, said the fund was paying out €2.50 for every €1 paid in claims.
There were 440 claims last year and 311 claims already this year, mainly connected to the problems with Irish banks. Shields is expecting brokers to tell him by today if cover has been found.
If the fund folds, it will leave thousands of Irish solicitors desperately trying to find cover before the 1 December deadline or face being dumped in the Irish assigned risk pool.
Shields wrote: “As I have often said, we were set up by solicitors for solicitors. It would only be if the circumstances are unavoidable that we would have to cease business.
“We must now wait to see if our reinsurers can obtain a renewal slip and stop loss insurance for the Fund for next year.” Stop loss insurance limits a self-funded plan’s exposure to numerous claims.
Meanwhile, the UK market has seen a late entrant offering insurance to solicitors before the 1 October deadline.
Ukranian-based Lemma Insurance Company is providing capacity for Gibraltan-based Monitor Insurance Services to write anywhere between £5m and £10m worth of business, Insurance Times understands.
Lemma is currently recorded with a B+ (Good) rating from AM Best.