Indemnity cover goes open market on 1 September – and the Law Society has laid down the minimum terms on which insurers can offer cover to solicitors. These are substantially wider and more generous to solicitors than indemnity policies available to most other professionals, but speculation is rife that up to 800 firms will be unable to negotiate cover on the open market. So what are the key areas that every law firm should be addressing?
Awareness
Do all of your staff know about the changes that are taking place in the insurance arrangements for your firm? If anyone knows of a mistake or complaint but does nothing about it, you might not be covered if a claim comes in after the Solicitors’ Indemnity Fund (SIF) ends on 31 August. New insurers will want to be sure that you have notified the SIF of any circumstances that could lead to a claim.
Start the campaign now – and include support staff because they might be able to tell you about case handlers’ problem files, or the case of the letter that went in the wrong envelope.
Professional indemnity policies cover you on a ‘claims made’ basis. It is the insurer on risk when the claim is made who is liable, not the insurer at the time of the alleged act or omission.
However, there is also provision in professional indemnity policies and the Solicitors’ Indemnity Rules for you to voluntarily notify circumstances that could give rise to a claim. If a claim arises from those circumstances, it falls within the cover at the time the circumstances were notified. Tell SIF of anything important now – and repeat the campaign for the rest of August.
Unlike SIF, your new insurers will almost
certainly require you to notify them of circumstances when they arise so constantly monitor the situation and encourage staff to tell you about problems on an on-going basis.
Proposal form
How much information are the insurers looking for? Some brokers are offering schemes that involve virtually no proposal details, just your SIF claims printout and gross fee certificate. But if that is all the insurers are asking for, how do you know if you are getting the best deal? You want a policy that reflects the steps you take to make your practice better than the rest. Consider a supporting statement that deals with these points and sets out the profile of your firm, its management systems and client base.
At the other extreme, some insurers are looking for lengthy risk management questionnaires and detailed proposal forms to be signed by all partners.
Insurers might also be particularly keen to know about people who have joined your firm, because radical new provisions relating to successor practices might mean they have to cover claims against the staff’s previous firm.
