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Magian Mutual closes to new business

Professional indemnity insurer Magian Mutual has closed to new business after haemorrhaging 30 per cent of its members in the last year.

The closure follows persistent speculation that the mutual, established by PI Direct in 2003 to bring new capacity in a hard market, was struggling to cope with soft market conditions.

Head of Magian Underwriting Glyn Morris blames lack of loyalty among members who ditched the mutual for cheaper rates elsewhere. He says although underwriting results were encouraging, it could not sustain a drop in membership from a peak of 500 to just 350.

Magian will continue to operate through a new underwriting agency backed by Lloyd’s syndicate Heritage. Outstanding liabilities have been reinsured with Everest Re.

Morris says: “There was a lack of loyalty from a percentage of members who made the ridiculous short-term decision to leave their own company for a 10 per cent premium cut.”

Collegiate managing director Tony Howe says: “This raises doubt over the long-term prospects of these ventures. This could be bad news for IFAs as there could be no one willing to step in and provide capacity in hard market conditions.”

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