Business will continue to trade as a going concern, but insurer is banned from writing new UK business
The market was left reeling this week following the announcement that the Irish regulator had stepped in to appoint administrators to controversial insurer Quinn.
Quinn, which has a reputation for undercutting its competitors, has been banned from writing new business in the UK. The regulator said: “The effect of this action is to prevent Quinn Insurance Ltd suffering further financial losses from its currently unprofitable UK business.”
Existing policies will remain in force and claims will be paid, the regulator said.
The insurer will continue to operate in Ireland, but with new management and under close supervision from the Financial Regulator, the Irish equivalent of the FSA.
The Financial Regulator stepped in to protect policyholders. In a statement, it said: “The appointment of joint provisional administrators will better protect policyholders. It will allow the firm to remain open for business, to continue to be run as a going concern under different management and to put the business on a sound commercial and financial footing.”
The regulator is also investigating the insurer. It said: “The Financial Regulator has commenced an investigation into certain matters within Quinn Insurance Ltd that have very recently come to light.” It refused to comment further.
A Quinn spokesman hit back, saying: “As of today, the Financial Regulator has appointed a provisional administrator to Quinn Insurance Ltd. This is deeply disappointing for all of us in the context of the continued profitability of the group, which is currently in excess of €20m [£17.8m] per month.
“However, the regulator has seen fit to take this action in the context of a perceived depreciation of underlying assets of Quinn Insurance Ltd. We feel that this issue could have been resolved to the benefit of all in a relatively short space of time, and we will be working with the regulator and the administrator to resolve all outstanding matters.”
The firm’s spokesman continued: “The business continues to trade as a going concern, with the objective of ensuring a financial restructuring to safeguard the overall business in the longer term.
“All other group businesses are unaffected by this development, and the group is confident that its current negotiations with its lender group will result in a successful refinancing. We will provide further update as matters progress.”
The appointed administrators, Grant Thornton, issued this statement: “The administrators shall take over the management of the business of Quinn Insurance Ltd and shall carry out that business as a going concern with a view to placing it on a sound financial and commercial footing.”
An FSA spokesman said: “The Financial Services Authority is working closely with the Irish authorities. Quinn’s UK branch … specialises in motor and professional indemnity insurance and has now closed to new business.
“The Irish regulator has confirmed that existing policyholders in the UK will continue to be covered. Customers of the firm can continue to make claims and should continue to pay direct debits and premiums in the normal way.”
A colourful past
Quinn Insurance chief executive Colin Morgan was not commenting this week, following the news that the insurer was in provisional administration and banned from writing new business in the UK.
In an interview with Insurance Times last September, Morgan defended Quinn’s record. He admitted the insurer had “a regulatory issue” in 2008, when rumours about its future circulated, but said it had “dealt with that and moved on”.
He added: “We have always based our business to a large extent on word of mouth, and ultimately the rumours of last year will be long forgotten. What won’t be forgotten is how we handle our business.”
Morgan spoke in detail about the insurer’s claims handling, which caused much of the controversy surrounding it. “Our approach is to try and sort claims sooner rather than later,” he said. “There’s a lot of leakage in claims costs to third parties. We feel in some cases those third parties, whether solicitors or accident management companies, are not required to get a fair settlement for the claimant. So our approach is to cut those costs out where possible.”
He also defended Quinn’s low prices. “We price to make a profit, because we have to,” he said. “We’re focusing on particular niches and, because of cost advantages that we have, we feel we’re able to be reasonably competitive there.”