Gibraltar-based firm blames falling rates and increasing fraud for withdrawal
Gibraltar-based insurer Elite is withdrawing from the solicitors’ professional indemnity (PI) business in England and Wales.
The unrated company blamed falling rates, increasing fraud on solicitors’ client accounts and the UK government’s proposed increase in the small claims market for its decision.
The insurer said the increase in the small claims market, announced in the Autumn Statement as part of measures to curb spurious whiplash claims, would mean less business for its target market target market of personal injury lawyers.
People are less likely to hire a solicitor for the small claims court because they typically have to pay the solicitor if they lose.
All Elite’s existing solicitors’ PI policies will continue until expiry but renewal terms will not be offered.
The move is likely to be a blow for solicitors that struggle to find PI cover. Elite had a 2.6% share of the UK solicitors’ PI market in the 2014/15 underwriting year, measured by premium written, down from 4% the previous year.
Elite chief executive Jason Smart (pictured) said: “Elite entered into the solicitors’ PII market in 2012 and has built up a considerable reputation as a serious player, despite being constantly attacked for being an unrated insurer.
“However, recently some rated insurers have reduced premium rates to a level which Elite believes are unsustainable, which is ironic as unrated insurers are often accused of discounting rates.
“The minimum terms require coverage of losses on solicitors’ client accounts by, inter alia, fraud attacks. We have seen an increasing number of such attacks and feel these are not likely to abate. This risk is beyond the control of our underwriting team.
“We also consider that the small claims limit increase, announced by HM Government in the Autumn Statement, will have an adverse effect on our target market of personal injury solicitors. Again, as the minimum terms require a six-year run-off, Elite considers this risk is unsustainable when rates are reducing.”
He added: “This is not a decision we have taken lightly, albeit this line represents less than 2% of the current year’s [gross written premium]. However, this will allow Elite to concentrate on the strong growth in its remaining markets throughout Europe.”
Elite said gross written premium for the year ended March 2015 was £160.5m, up 28%, while earnings before interest and tax of £7m.