Please note that the full interview/article (which will include contributions from others) is available direct from the provider’s site and that copyright applies to the whole article – therefore my contribution only has been quoted.
From the Post Magazine
Brokers may also face issues beyond arranging alternative cover. Branko Bjelobaba, an insurance compliance consultant, said that by using poorly capitalised unrated insurers, brokers could leave themselves exposed to law suits.
“Most of these offshore insurers, because capital requirements are less than they are in the UK, can afford to discount their premiums heavily because the amount of solvency they require is less,” he said.“But then if they go insolvent, as has happened in Denmark and Gibraltar and other countries, then the broker is at risk, because they could be sued by their clients on a professional negligence basis.
“For brokers thinking of using offshore – unless their risk is really odd, why would you think it’s a good idea to place offshore? I don’t think it’s a good idea at all. “You have to explain to a client: it’s because I want bigger commission, you want a cheaper deal so I will place you offshore, are you happy with that? The client needs to buy in to the decision rather than be told ‘this is a regulated insurer within European Union or European Economic Area’.”