Run-off Cover

The following information on run-off cover relates to firms that ceased or will cease to practice prior to 30 November 2017 and entered the Run-off Fund for the 2017/2018 indemnity period.

Updated information relating to firms who entered the Run-off Fund in the 2014/2015 indemnity period and firms wishing to enter the Run-off Fund in the 2015/2016 indemnity period (firms that cease during the 2014/2015 indemnity period) will be available shortly.

Please Note: The information below is intended as general guidance and does not constitute a definitive statement of law.

Run-off Fund Guidelines

  • Download the 2017/2018 Run-off Fund Guidelines (published soon).

Special Purpose Fund (SPF)

The SPF was established for the 2012/2013 indemnity period and continues in the 2017/2018 indemnity period. It consists of two elements:

    1. the existing Assigned Risks Pool (“ARP”); and
    2. the new Run-off Fund (“ROF”).

SPF Manager

The SPF Manager has responsibility for managing both the ARP and the ROF. However, each fund is a separate entity. The position of SPF Manager was awarded to DWF Claims (Ireland) Limited (formerly known as Triton Claims) following an extensive tender process.

  • Manager: DWF Claims (Ireland) Limited, 5 George’s Dock, IFSC, Dublin 1
  • Email: SPF@dwfclaims.com 
  • Phone: 01 790 9444
  • Fax: 01 790 9401

Run-off Fund

The Run-off Fund was established in the 2011/2012 indemnity period in order to assist firms ceasing practice, make retiring more affordable for solicitors, improve public protection, prevent abuse of the system, and provide incentives for solicitors ceasing practice to do so in an orderly fashion.

The Run-off Fund provides run-off cover for firms ceasing practice:

  1. who have renewed their professional indemnity insurance (“PII”) for the current indemnity period; and
  2. subject to meeting eligibility criteria, including that there is no succeeding practice in respect of the firm.

When a firm ceases in practice in an indemnity period (between 1 December and 30 November), their PII remains in place for the remainder of the indemnity period and, if they meet the eligibility criteria, the ceased firm enters the Run-off Fund in the next indemnity period. For example:

  • Firms that renewed their PII cover for the 2016/2017 indemnity period and ceased on any date between 1st December 2016 and 30 November 20127 are provided run-off cover by the Run-off Fund commencing 1 December 2017 (provided they meet the eligibility criteria)

Any firm that ceased prior to 1st December 2011 is not covered by the Run-off Fund and should have obtained and maintained run-off cover from their last insurer.

Run-off cover

Run-off cover is provided to firms through the ROF under the following terms:

  • Run-off cover should be provided indefinitely for so long as the freedom of choice model is retained or master policy is introduced in future.
  • The cost of providing this run-off cover will be recovered by insurers through general premiums collected, rather than by way of an additional premium paid by the firm ceasing practice.
  • All firms will carry the same self-insured excess into run-off that they had in their last coverage period in practice. This standard excess will be separate from any additional excesses which may be applied in certain cases.
  • Firms obtaining run-off cover through the ROF will not be required to bear any additional excesses for run-off cover provided they meet the following cessation obligations in the required timeframes:
    • notification of closure to the SPF Manager;
    • provision of last proposal form and policy document to the SPF manager;
    • adherence to close of practice guidelines;
    • meeting a minimum common risk management standard;
    • prompt notification of claims to the SPF manager; and
    • cooperation with the conduct of claims.
  • Additional self-insured excesses will be applied to firms commensurate with any failure to meet these cessation obligations. There will be no payment by insurers of such excesses for claims by financial institutions.
  • Run-off cover will commence at the end of the expiring coverage period for a firm, not at the date of cessation of practice of the firm.
  • Anti-abuse provisions are in place to prevent “phoenix firms” (i.e. firms ceasing in practice in order to put claims into the ROF and then reopening under another identity).
  • Terms and conditions of run-off cover as provided by the ROF will reflect the minimum terms and conditions for each subsequent indemnity period.
  • New requirements pertaining to compliance of firms entering and existing in the ROF will commence on 1 December 2017. Further details on these requirements will be provided shortly as part of the upcoming Run-off Fund Guidelines for 2017/2018.

See below for additional relevant documentation.

Self-insured excess

Self-insured excess means the amount that the insured, in this case the firm, is required by terms of any contract between the insured and the insurer to pay to a claimant in the event of a claim.

Firms will carry the same self-insured excess into run-off that they had in their last indemnity period in practice. This standard excess will be separate from any additional excesses imposed.

The SPF Manager will pay any amount that is within the self-insured excess of any firm’s run-off cover to a claimant, but will be entitled to recover this amount from the firm.

Additional self-insured excesses

Firms obtaining run-off cover through the ROF will not be required to bear any additional excesses for run-off cover provided they meet the following cessation obligations in the required timeframes:

  • notification of closure to the SPF Manager;
  • provision of last proposal form and policy document to the SPF manager;
  • adherence to close of practice guidelines;
  • meeting a minimum common risk management standard;
  • prompt notification of claims to the SPF manager; and
  • cooperation with the conduct of claims.

Additional self-insured excesses will be applied to firms commensurate with any failure to meet these cessation obligations. Such self-insured excesses will be applied as aggregate excesses (not each and every claim) as set out in Schedule 2 of the run-off rules.

Adherence to close of practice guidelines, prompt notification of claims and cooperation with the conduct of claims will be subject to continuous assessment.

The SPF Manager will not be required to pay any amount that is within the additional self-insured excess in respect of claims made by financial institutions.

Notification of closure

A firm which intends to cease practice must provide the SPF Manager with a written notice of its intention to cease practice by whichever is the earlier of the following:

  • at least 60 days prior to ceasing practice; or
  • at least 60 days prior to the expiry of its coverage period.

The written notice of intention to cease practice can be in the form of the Notice of Closure Form or in any written form provided that includes the information contained in the Notice of Closure Form.

Any notification of closure must include the following:

  1. a copy of the firm’s most recent completed proposal form;
  2. a copy of the firm’s most recent policy of qualifying insurance.

Minimum risk management standard and risk management audit

A risk management audit means an investigation of the practice of a firm with a view to ascertaining whether the firm has satisfied the minimum common risk management standard as published by the PII Committee.

Risk management audits are on a pass/fail basis. Failure to achieve a passing grade in the audit will result in the imposition of a maximum additional excess per indemnity period of €15,000.

Risk management audits are carried out where required, depending on the risk profile and co-operation level of the firm.

Close of practice guidelines

Failure to comply with the close of practice guidelines as published by the Society will result in the imposition of a maximum additional self-insured excess per indemnity period of €30,000. View the Close of Practice Guidelines.

Claims

Within a reasonable time following the notification of closure, and before the date of cessation, the firm must provide confirmation to the SPF Manager that the firm is not aware of any other claims or circumstances which may give rise to future claims and the firm must continue to notify its insurers of any such claims or circumstances in the period until expiry of its policy.

The firm must report any matters to the SPF Manager which come to their attention with regard to claims, notifications or circumstances which may give rise to claims in a timely manner, following commencement of coverage of the firm by the Run-off Fund.

Any interested party may notify a claim or circumstance on behalf of a run-off firm to the SPF Manager and the insurer may not dispute the validity of such notification solely on the grounds that it was not made directly by the firm.

Provision of extra information

Every run-off firm will be required to provide the SPF Manager with any information the SPF Manager, in its discretion, reasonably requires to deal efficiently and effectively with the firm’s membership of the ROF.

Succeeding practice rule

View information on succeeding practices.

The definition of succeeding practice will be amended in the PII documentation for 2013/2014 indemnity period, which will be published shortly. 

Phoenix firms and anti-abuse provisions

“Phoenix firms” are firms that cease practice in order to put claims into the ROF and then reopen under another identity.

A phoenix firm is any firm that is carrying on a practice that, in the absolute discretion of the PII Committee, is largely similar to or has succeeded to the practice formerly carried on by a predecessor firm or any part thereof.

Two or more firms may be treated as each being phoenix firms to a single predecessor firm.

The PII Committee may, in its absolute discretion, at any time, decide to treat any firm as being a phoenix firm to another firm, thereby rendering the predecessor firm unable to become an ARP eligible firm or a run-off firm. The PII Committee may, for the purposes of making such a decision, take into account such facts and matters as appear to it to be appropriate and relevant.

Anti-abuse provisions have been put in place to seek to prevent phoenix firms. Such provisions include:

  1. A firm that ceases practice that is entering the ROF will be required to sign a declaration as follows:
    • stating that they have no intention in forming a successor (phoenix) practice; and
    • confirming that all claims and circumstances have been notified to their existing insurer up to expiry of the firm’s insurance.
  2. A 'phoenix capture' system will be in place to identify any phoenix firm that attempts to open in practice and such firms will be designated as phoenix firms by the PII Committee.
  3. Phoenix firms will be required to obtain insurance covering all claims by their predecessor firm from the date of cessation of the predecessor firm in order to commence in practice. Insurers will have right of reimbursement for claims already paid for the predecessor firm.
  4. Phoenix firms that do not obtain the required insurance will not be allowed to commence in practice.

Relevant Documentation

  1. Solicitors Acts 1954 to 2015 (Professional Indemnity Insurance) Regulations 2017 (S.I. No. 389 of 2017) and minimum terms and conditions 
  2. Run-off cover rules (published shortly)
  3. Close of practice guidelines
  4. Minimum common risk management standard
  5. Notice of closure form
  6. Run-off policy (published shortly)
  7. ARP run-off policy (published shortly)

For more information on ceasing in practice, visit the Closing a Practice section.

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