A £70m legal action against solicitors who handled personal injury claims on behalf of The Accident Group (TAG) has left professional indemnity (PI) insurers exposed to massive losses.
Winterthur Swiss Insurance Company has sent about 700 letters to law firms alleging negligence. It maintains the firms should not have accepted the claims due to their poor quality.
Alexander Forbes Profess-ions director Steve Holland said the number of PI claims made would depend on how many firms had gone through a ‘change of facts' procedure.
The procedure allows them to reject the case up to six months after a CFA or an ‘after-the-event' policy had been issued. If they had used the procedure, it could help to demonstrate that they had not been negligent.
Holland said PI insurers had been aware of the potential issue facing firms who had dealt with TAG when policies were renewed in 2004.
"They were asking how many cases they had accepted pre and post March 2001, as there was the belief that TAG had been encouraging solicitors to take on more and more claims after this point."
He said insurers had been "sounding out" the potential liability of firms at renewal.
A spokeswoman for Winterthur Swiss Insurance Company confirmed the company, represented by Barlow Lyde & Gilbert (LBG), had sent letters to a number of solicitors announcing that "the group reserves the right to bring proceedings against them in respect of insurance policies underwritten in connection with TAG".
It is unclear whether any of the other TAG underwriters are planning similar action.