An administrator (Kieran Wallace of KPMG) was provisionally appointed to CBL Insurance Europe DAC by the High Court this morning on an ex parte application by the Central Bank of Ireland, in accordance with the provisions of the Insurance (No. 2) Act 1983.
It is the statement of the Central Bank that existing policies continue to remain in force.
This application was made following the decision by the High Court of New Zealand on 23 February 2018 to put CBL Insurance Limited (parent company and major reinsurer of CBL Insurance Europe DAC) into interim liquidation, following an application by the Reserve Bank of New Zealand.
CBL Insurance Europe DAC had previously announced on 20 February 2018 that they had immediately ceased writing all new contracts of insurance and will not be renewing any existing contracts of insurance, as directed by the Central Bank.
It is the view of the Society that the appointment of the provisional administrator does not constitute an insolvency or non-performance event as defined in the professional indemnity insurance regulations as:
- the provisional administrator was appointed on an ex parte interim basis and full appointment of an administrator and order of administration have not yet been confirmed; and
- even if a full administrator is appointed, under Section 2(3) of the Insurance (No. 2) Act 1983 the purpose of such appointment is to take over management of the business of the insurer and to carry on that business as a going concern with a view to placing it on a sound commercial and financial footing.
Consequently, it would be precipitous to claim that this latest adverse development is an insolvency or non-performance event for the purposes of the professional indemnity insurance regulation. As such, provided that there are no further adverse developments, solicitors covered by CBL Insurance Europe DAC are not required at this time to obtain alternative cover.
However, should an insolvency or non-performance event as defined under the professional indemnity insurance regulations be triggered in future, each firm covered by the insurer will be required to obtain replacement cover within 30 working days from another participating insurer or the Assigned Risks Pool (“ARP”) from the date of the insolvency or non-performance event to the end of the current indemnity period (30 November 2018). This will require the payment of an additional premium to the new insurer or the ARP.
The Society will continue to monitor this matter closely. Any queries should be directed to the Society’s PII helpline at 01 879 8707 or firstname.lastname@example.org. The helpline is available Monday to Friday 10am to 4pm to assist with queries.