1,300 firms at risk after Latvian insurer Balva forced to call in liquidators

  • Print
  • Comments (3)

Readers' comments (3)

  • This is worrying and not only for the firms insured with Balva - approximately one in seven in the profession. The limited alternatives available to them in practice may be unattractive too. Any increase in intervention costs will fall on the profession as a whole. For those with Balva, the concern will be that a book of law firm PI claims may take 15 years or more to close, particularly when you allow for firms with 6 years' run-off cover, circumstances which take years to mature into claims, standstill claims, limitation periods on trust claims etc. Some of these firms may also be victims of the Lemma collapse. Firms and clients are at risk. The problem is that we have 'Rolls Royce' insurance in terms of breadth of cover, but that is not a sustainable model for a large proportion of the profession. These are not all firms who had a choice between rated insurers and Balva - I suspect many had no choice at all, or in their current financial condition, could not afford the rated option. A partial, if imperfect, solution might be for the SRA to exercise its power of waiver to allow firms with problems so that they might, for example, obtain cover from a rated insurer by excluding claims from a particular rogue partner which had been notified to the current insurer. The Legal Services Board Consumer Panel looked recently at the disparity in client protection between the various segments of the legal profession. The SRA's is by far the widest, but that is no longer operating even in the interests of the consumer, let alone the profession. It also opens up the possibility of Merrett v Babb claims against employees of failed firms.

    Unsuitable or offensive? Report this comment

  • For many firms this will be the tipping point, with 1/4 day approaching many firms will not have the time to access the market, even if they can afford the additional 1/4 + a loading of the cost of their PII policy.

    What is desperately sad is that this even was hardly unforeseeable.

    But hey, as long as the label is to remove the appellation 'qualifying' changed, what could possibly go wrong this year?

    Unsuitable or offensive? Report this comment

  • The following Latvian press article makes for interesting reading.

    It appears that the Balva has been closed on the basis that the new owners had not been approved by the Latvian regulator and they failed to put in the capital needed to write extra business. It also states that the insurer had never made a profit.

    Remember not all unrated insurers are in the same boat.

    http://translate.google.com/translate?sl=auto&tl=en&u=http%3A//www.apollo.lv/zinas/aas-balva-in-memoriam/572982

    Unsuitable or offensive? Report this comment

Have your say

Mandatory Required Fields

Mandatory

Comments that are in breach or potential breach of our terms and conditions in particular clause 8, may not be published or, if published, may subsequently be taken down. In addition we may remove any comment where a complaint is made in respect of it. These actions are at our sole discretion.

  • Print
  • Comments (3)