The collapse of Irish insurer Quinn could bring about the end of the professional indemnity assigned risk pool (ARP), a leading insurance broker has warned.
The Irish Financial Regulator forced the insurer, which is part of the larger Quinn Group, into administration last week (TheLawyer.com, 31 March).
Quinn insures 2,911 firms across England and Wales, the equivalent of £24.5m in premiums.
According to Steve Holland, professions director at broker Lockton International, the insurer’s sudden exit from the market could be the catalyst that brings about
the collapse of the ARP, the insurer of last resort.
“It’s always been possible that an insurer would exit the market,” Holland said. “The share loss of such a major player will have dire consequences.”
The ARP is funded by insurers who participate in the sector. Firms that are unable to get insurance in the open market must instead get cover from the ARP and pay up to 30 per cent of fee income for it.
Prior to the collapse of Quinn Lockton estimated that the ARP would likely account for up to 15 per cent of premiums paid, but this is now expected to soar.
Holland said this could cause an exit of capacity from the sector, meaning the ARP premium pot is not properly underwritten.