Magian Mutual Insurance Company, the mutual insurer established by PI Direct in 2003 to provide professional indemnity capacity then lacking in the market, has closed to new business as of 31 December 2005.
The board and the managers said they considered that to close now will maximise the profits available to members.
The tail of outstanding liability has been reinsured with Everest Re, an A++ reinsurer, on terms which the company said save much of the costs normally associated with closure and which provide members with a high level of security.
Magian said the managers will continue to underwrite through a new underwriting agency, backed by Heritage, the Lloyd's Syndicate.
MU's launch of the new cover from 1 January involves a joint venture with a new on-line compliance system provided by financial IT consultancy ComplianceMasters.
MU's new cover will offer cover up to £3m indemnity limit per risk.
Magian said the existing underwriting team and the claims
management team, through Collegiate Management Services, will continue.
Magian added that it will not be offering the facility direct to IFAs and will be quoting through only three or
four specialist brokers, who meet the service standards set by Magian and have the requisite specialist knowledge of the financial services industry.
The new on-line compliance system will not be mandatory but will be offered to all insured firms.
Glyn Morris, the head of the Magian Underwriting team said: "Insureds [will] benefit from our joint venture with ComplianceMasters, in the expectation that by adhering to the ComplianceMasters system, their premiums will come down in the coming years as their risk profile improves.”
