The fate of professional liability insurance in general as well as the future of one of the country’s main providers of professional indemnity insurance is on the agenda for a special meeting of Ireland’s Law Society council.
The Irish Solicitors’ Mutual Defence Fund is understood to be facing massive liabilities of approximately €170 million. Reinsurance covers 90 per cent of the liability, which leaves €17 million in unsecured liabilities. The SMDF is understood to be in search of a contingency of around €25 million contingency from the Law Society in order to make up the shortfall.
The society has already agreed to guarantee a loan to the fund last year for €8.4 million. The fund needed the loan when it lost 97 per cent of the sum in a bond investment.
Set up in response to the high levels of commercial insurance provider premiums in 1987, the fund’s seven directors include a serving council member and two former presidents of the Law Society. Leading Dublin solicitor Laurence Shields is currently executive chairman.
Stockbroker Bloxhams were sued by the fund over the bond in Commercial Court. The case has since been settled on confidential terms, but industry experts understand that Bloxhams agreed to a repayment of bond’s value over a period of several years.
The Law Society meeting will see the discussion of a levy on society members as a way to generating funding for the €25 million contingency the fund in currently seeking. Proposals will also be heard in regards to the possible winding down of the fund as well.
The fund is the primary insurer for around 60 per cent of law firms in Ireland. The popularity of a levy supporting it is bound to be low for those firms not insured with the fund.