The Irish Auditing and Accounting Supervisory Authority (IAASA) has recently introduced regulations detailing the Professional Indemnity Insurance (PII) requirements for liquidators. The regulations came into effect on 1 June last.
Liquidators should note that the regulations may differ from their current professional indemnity requirements in certain key respects.
For example, the new regulations provide for the activation of policies on the basis of claims made within the period of cover, whereas for example under the regulations regarding Solicitors PII, policies are only required to react on the basis of "claims made and notified". Practitioners will need to make sure they have adequate cover in place.
Liquidators also need to ensure that they have an adequate level of cover in place. Whilst the Regulations provide that cover of €1.5 million must be in place for each and every claim, they further provide that a liquidator must have cover with a limit of liability equal to at least the estimated realisable value of the assets of the company being wound up, as estimated by the practitioner. This value could be significantly greater than €1.5 million per claim.
It will be interesting to see how the insurance market reacts to the Regulations, but one expects higher premiums will follow the introduction of the Regulations.
Warren Baxter a director in Deloitte’s Restructuring Services team commented, “these changes are to be welcomed as they should benefit both liquidators and their clients by ensuring that adequate cover exists in what is becoming an increasingly complex and litigious area”.