Loud voices trumpet the fall of SIF and promise a better tomorrow. One should be aware of Greeks bearing gifts – especially when they are promises for the future.
Premium rates for SIF are fixed without a profit element and assess a firm's claim records. If one's premium has increased because of claims loading this is because claims have been made on that practice. This is the claim record which an insurer will consider when fixing the premium for your practice in the future.
The promise of lower premiums is a sprat to catch a mackerel. If insurers had to meet the liabilities for claims that have fallen on SIF as a result of the crash in property prices it is unlikely that their current rates would be so modest – if they were prepared to offer cover at all.
A move to the market does not mean that the SIF shortfall will go away. It still has to be paid. If SIF ceases to exist will they then be able to afford to allow the shortfall to be paid over an extended period of time?
The market option may not be so attractive when one considers these matters and specific cases.
Thomson Snell & Passmore