1,300 solicitors firms are facing the prospect of having to find alternative insurance following the decision by the Latvian Financial and Capital Markets Commission to withdraw the operating licences for insurer Balva. According the press release on the FCMC’s website, Balva must now launch a winding-up process by appointing a liquidator but all its insurance policies are still effective.
Where a qualifying insurer is subject to an “insolvency event”, unless there is a waiver, affected firms are required by rule 6 of the SRA Indemnity Insurance Rules to place insurance with another qualifying insurer or enter the assigned risks pool.
The SRA’s position is that there has not yet been an “insolvency event”. However, even if the withdrawal of Balva’s operating licence is not an “insolvency event”, it seems likely that the appointment of a liquidator will be.