Lemma Europe was one in a line of high profile collapses of unrated insurers with heavy exposure to the UK solicitors market, when it was placed into liquidation last September. The Gibralter regulator has been carrying out an investigation into the failed company since, and has uncovered a litany of failures across its regulated functions - including underwriting, claims handling, reserving and accounting.
The company's finance manager, David Brown, 'failed to play his part in establishing approprate controls' according to the Financial Services Commission report - and Lemma has been found to have submitted false financial statements.
This report can only increase concern regarding the continued prevalence of unrated insurers in the solicitors market. While the SRA has not yet released formal statistics, Lockton believes that around £38m of premium at this last renewal, was placed with unrated insurers, an increase from last year, notwithstanding the forced withdrawal of Balva and Berliner from the market.
For more information regarding the state of the market following the 2013 solicitors renewal, contact us.