The Solicitors’ Mutual Defence Fund, Ireland’s primary provider of professional indemnity insurance for solicitors, was established in 1987 as a response to the high premiums solicitors were being charged by commercial insurers for their professional indemnity cover. But the Fund is now facing difficulties. Whilst 90% of its €170 million liabilities are covered by reinsurance, that still leaves a €17 million deficit.
Amongst the proposals being considered is a levy on Law Society members to create a €25 million contingency and a possible winding down of the Fund altogether. But the levy is unlikely to be popular with the 40% of law firms who arrange their professional indemnity with other insurers and who would have to pay the levy on top of their existing premiums. Particularly since those commercial premiums have been rising sharply as a result of the number of claims arising from alleged property malpractice.
Indeed, at the end of last year, over 50 law firms in Ireland found themselves unable to renew their professional indemnity insurance at all and sought to join the Law Society’s own ‘safety net’ insurance scheme or assigned risk pool.
What the future holds for the Solicitors’ Mutual Defence Fund (which is independent of the Law Society) and what impact there will be on the professional indemnity insurance market for solicitors in Ireland remains to be seen.
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