INTERVIEW/John Glynn, Select Legal Indemnities:THERE ARE precious few businesses which can legitimately claim in the current economic climate to be recession-proof – but specialising in the arcane ways of legal indemnity insurance would appear to be one of them.
It’s a sign of the times, but what’s been particularly beneficial is the new assumption by mortgage lenders that virtually any property could be the subject of a repossession order in the future – and so every legal title must be squeaky clean.
“Essentially what we’re looking at is a zero-tolerance mortgage market,” says lawyer John Glynn (35), co-founder and legal and underwriting director of Select Legal Indemnities.
“Lenders want to be certain that there will be absolutely no impediment to the sale of a property if it does end up being repossessed – so many properties that were acceptable for mortgages six months ago are now being rejected by the banks.
“However, if there are any issues or potential issues, a title insurance or legal indemnity policy can often provide the comfort lenders are looking for to complete a mortgage. They cover off all the risks.”
Glynn began his career as a conveyancing solicitor in his native Galway before moving in 2002 to work in the niche market of defective title insurance with First American, a subsidiary of the financial services group IFG.
That’s where he met his business partner Trevor Grant.
“After deciding to set up on our own we did what almost became a road tour of Europe during 2008 looking for a quality legal indemnity provider with a broad range of products and the quality of service we were looking for.
“We finally decided on the Liberty Syndicate at Lloyds because, although title insurance has traditionally been an American product and Liberty is a US company, its association with Lloyds means it has a less rigid, more European way of doing business.”
When they began trading at the start of the year, they regarded solicitors as their most important market.
“That was for the obvious reason that it’s solicitors who deal with title problems relating to property,” says Glynn, who’s also an attorney at the New York bar.
“However, as we began talking to solicitors one of the recurring themes we heard was the extent to which lenders were being much stricter about the quality of title they would accept for mortgages.
“What happened was that when things were frenzied in the property market, lenders were willing to take a risk even when they knew there were potential problems with a title or the ownership of a property. They knew the value of the property was going up anyway.
“But now, because there’s a lot of negative equity and potential negative equity in transactions, they want everything covered perfectly so that if they have to repossess they can get full possession of the property with no problems. That’s meant expansion for us.”
There are always the more prosaic types of case where someone lives in a house for 20 or 30 years and then decides to sell but can’t find the title documents and takes out title insurance.
But, believe it or not, the type of policy which has surprised Glynn most by its popularity, he says, is judicial review coverage.
“When planning permission is granted there’s a period of eight weeks within which people can take action challenging the form in which it was granted, in other words the procedure rather than the substance.
“So judicial review coverage will allow a developer to go ahead with a project before that eight weeks has passed.
“A few years ago I was on a building site with a developer. The development was costing €48 million and the insurance premium was €72,000.
“When I asked him what he thought of the premium he started laughing and told me the hoardings around the site were costing more than the insurance – but the insurance was allowing the job to get started. It taught me that cost is always relative.”
ON THE RECORD
Name: John Glynn
Company: Select Legal Indemnities
www.selectlegal.ie
Job: Co-founder and legal and underwriting director
Age: 35
Background: After a BA at NUI Galway in 1995 and an LL.B in 1997, he worked as a conveyancing solicitor with local firm Claffey Daly.
Also qualified as a solicitor in Northern Ireland, England and Wales, and as an attorney at the New York Bar.
Joined IFG Group in 2002 as legal and underwriting director of their title insurance division, First American.
Set up Select Legal Indemnities with business partner Trevor Grant in January 2009.
Inspired by: Heston Blumenthal, three-Michelin-starred chef/patron of The Fat Duck in Berkshire, reputedly the best restaurant in the world.
“His molecular gastronomy movement constantly pushes the boundaries and approaches food in new ways.
“We could do with a Fat Duck approach in Ireland if we’re to get out of the current economic paralysis.”
Dealing with demand for legal indemnity insurance: “Even allowing for the overall reduction in construction activity, demand for legal indemnity insurance contracts has increased significantly. No one is taking chances any more. If it’s not insured it doesn’t happen…”
Most important thing learned: Don’t over-complicate things. “Lenders and lawyers always over- complicate issues and transactions. What we do is focus on the risk and decide whether or not we can cover it – it’s that simple.”
