Irish Law Society fields questions over professional indemnity insurance bailout

The Irish Law Society has recently begun to field questions from law solicitors in the wake of the decision to have them pay the Solicitors Mutual Defence Fund’s €16 million professional indemnity shortfall through the use of a ten-year long annual levy.

Noting to the Law Society that the SMDF had insufficient reserves to meet professional liability insurance claims this past March, the business liability insurance organisation stated that it would stop taking new business this year.  It additionally stated that it would seek financial support in order to wind down in an orderly fashion.

The Law Society stated that the 2008-2009 professional indemnity period saw accounts covered by the SMDF experience a far worse number of claims than had been previously estimated.  While the SMDF has not yet published official figures, the Law Society estimates that the net additional exposure for the insurer will be approximately €5 million.

The Law Society made estimates of around €202 million in gross ultimate claims up to November of last year.  Approximately 90 per cent of that figure is covered through reinsurance however.  The SMDF currently provides insurance for 22 per cent of Irish solicitor firms, with more than 1,470 solicitors across an excess of 480 firms.

The SMDF previously insured more than 50 per cent of all firms in Ireland until approximately two years ago.  However the increases in costs of cover have led many firms to take up professional indemnity cover from one of many other private insurers in Ireland.

Once the SMF notified the Law Society of its dire straits, its professional indemnity taskforce immediately published a member briefing document in the form of a report.  The report recommended that the bailout could be supported by a €200 levy amended to every solicitor in Ireland’s practising certification for the next ten years.

© 2017 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , ,