Enterprise, a Gibraltar based insurer, is the latest 'unrated' insurer to crash out of the Solicitors' Professional Indemnity market, following the withdrawal of Elite, announced late last year.

This has echoes of the collapse of Balva two years ago, when the replacement insurer, Berliner, was forced to pull out of the market - although this time, at least, firms currently insured by Enterprise have a little more time to explore the market for alternatives.

Lockton have long warned of the dangers of unrated markets.  The combination of a lack of capital strength, low premiums, and often a lower-touch approach to underwriting has proven unsustainable time and time again, particularly against a backdrop of ongoing high claims.  

After a period of volatility, the Solicitors Professional Indemnity market has become much more stable.  Established A-rated insurers, in the market for the long-term,  are offering increasingly competitive rates in the face of new A-rated competition from the likes of Pelican and QIC.  For more information about the current market conditions, read our Solicitors PII Report.

Insured with Enterprise?

As Balva/Berliner policy-holders found out 2 years ago, and as Frank Maher has commented in response to today's announcement in the Law Gazette, although the SRA is reassuring policy-holders that their contract of insurance remains in place for the time being, "that is not the same thing as saying 'if you have a claim, the claim will be defended and...paid'".  Though remote, it is also possible that, over the next few weeks, an 'insolvency event' will be declared, meaning that policies will have to be replaced immediately.

Act Now

If you are currently insured by Enterprise, it is important to act quickly to protect your position.  Amongst other things, you will want to avoid any last minute scramble for cover - as many insurers identify a particular market capacity, and once they have achieved that with the firms they want, they will not actively seek to insure additional firms.

Established Insurers may also be wary of firms that have previously insured with an unrated carrier and/or moved insurer frequently.  You will need to make additional efforts to present your firm well.

Be wary of deals that seem 'too good'.  Always check that your broker can provide evidence of the 'A' security rating of a proposed insurer.  Only a few brokers will only access A-rated insurers on your behalf.

If you are a firm insured with Enterprise and wish to discuss how best to proceed, you can speak directly to one of our specialist solicitors professional indemnity team by calling us on 0845 0501 471.  Or you can email us.