Irish solicitors stymied after Law Society pulls PI insurance funding

Irish solicitors have been wondering which way is up after the Law Society considers to rescind any financial support to one professional indemnity insurance provider.

The Solicitors Mutual Defence Fund is but one of only seven professional liability insurance providers left to shoulder the burden of providing business liability insurance for the 9,500 solicitors in Ireland.  However as the SMDF has run out of funding, only six will remain as of this coming December.

The fund has said that it is unable to meet even its outstanding claims, which represents approximately £273.6 million  The Law Society of Ireland is currently considering a proposal to bail the firm out by levying the practising certificate of each solicitor throughout the next decade.

An unusual business, the SMDF was originally begun as a not-for-profit mutual fund with an eye towards the improvement of the professional indemnity insurance market.  Declaring on its website that the SMDF wants to be known for both excellence and quality, the mutual fund also said that it wanted to provide its members with the power to influence the professional indemnity insurance market in a positive manner through the achievement of higher standards in risk management.

The last annual report of the SMDF revealed that more than 90 per cent of the firms the fund insured were comprised of five solicitors or less.  With the managing partners of the largest firms in Ireland all stating that they have insurance elsewhere, only three solicitor firms with more than 21 lawyers utilised the SMDF as an insurance provider.

Laurence Shields, chairman for SMDF, stated that claims have risen to an unacceptable level at an alarming rate.  He also commented that the fund is heavily in debt to the Bank of Ireland as its reserves dwindled into the negative for the first time.

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