Professional indemnity insurance renewal

Professional Indemnity Insurance 04/11/2016

The mandatory professional indemnity insurance (PII) renewal date for all firms is 1 December 2016. This date is not negotiable. All cover under the current indemnity period will expire on 30 November 2016. 

Confirmation of cover

All firms must ensure that confirmation of their PII cover is provided to the Society within three working days of 1 December 2016, including those firms with variable renewal dates. Therefore, confirmation of cover in the designated form must be provided to the Society on or before close of business on Tuesday 6 December 2016.

Confirmation of cover should be provided by your broker through the Society’s online PII confirmation system. Such confirmation must include your policy number, and confirmation of cover cannot be provided until the policy is actually in place. As your firm has a statutory obligation to ensure such confirmation of cover is provided to the Society on or before Tuesday 6 December 2016, you are responsible for ensuring that your broker provides the Society with confirmation of cover by that date. You should also ensure that your broker has familiarised themselves with the online confirmation system and has the necessary information to confirm cover online (such as their login and password) in advance of 6 December 2016.

It is noted that some firms who have confirmed PII cover to the Society during 2016 have a coverage period that extends past 30 November 2016. Such firms are still required to reconfirm cover for 2016/2017 with the Society by 6 December 2016.

 Please note that your firm will not be reflected as having PII in place on the Society’s ‘Find a Firm’ online search facility until such time as the Society has received the required online confirmation of cover.

Guide to renewal

The guide to renewal for the 2016/2017 indemnity period will be published on the Society’s website on 1 November 2016 to assist the profession with renewal. The guide includes information such as tips for renewal, important points to note, and a guide to insurers and brokers. This guide will be updated frequently with new information received by the Society, in particular with regard to what insurers will be in the market in the next indemnity period.

Renewal resources

Renewal resources for the 2016/2017 indemnity period are available to download from the Society website at www.lawsociety.ie/PII and include the common proposal form, PII regulations and minimum terms and conditions, Participating Insurers Agreement, and relevant PII practice notes. The information available is frequently updated as more documentation becomes available.

Disclosure of financial rating

Financial ratings are obtained by insurers following assessment of their financial strength through an independent process by a rating agency. While a financial rating is an indication of the financial strength of an insurer, it does not guarantee an insurer’s financial solvency.

The Society changed the title of ‘qualified insurer’ to ‘participating insurer’ for the 2013/2014 indemnity period, and has kept this change in place for the 2016/2017 indemnity period, to more accurately reflect and emphasise the Society’s limited role regarding insurers in the solicitors’ PII market and to dispel the mistaken impression of approval or financial strength that may have been incorrectly inferred from the title ‘qualified insurers’.

Participating insurers are required to disclose their financial rating, or absence thereof, to firms when issuing quotations. This requirement was introduced in the 2011/2012 indemnity period and remains in place for the 2016/2017 indemnity period in order to:

  • Allow firms to make a more fully informed decision on their choice of insurer,
  • Ensure full transparency for the profession in relation to participating insurers meeting, or not meeting, generally accepted standards of financial strength, and
  • Do so in a way that will not restrict firms’ choice of insurer.

It should be noted that all participating insurers in the market are permitted to write insurance in this jurisdiction under the supervision of the Central Bank. The Society is not responsible for policing the financial stability of any insurer. The Society does not vet, approve, or regulate insurers.

More in-depth information on financial rating of insurers can be found on the Society’s website at www.lawsociety.ie/PII and in the guide to renewal. 

Notification of claims

All claims made against solicitors’ firms and circumstances that may give rise to such a claim should be notified to the firm’s insurer as soon as possible. In particular, claims made between 1 December 2015 and 30 November 2016 (both dates inclusive) should be notified by the firm to their insurer by 30 November 2016.

It is proper practice for firms to notify insurers of claims or circumstances during the year as they arise, not at the end of the indemnity period. Notifying all claims and circumstances at the end of the indemnity period is referred to as ‘laundry listing’ by insurers and is not looked on favourably. Firms should also ensure that their claims and circumstances notifications meet the notification requirements set out in the insurance policy terms and conditions.

The minimum terms and conditions for PII were amended in the 2011 PII regulations, and this change is retained in the minimum terms and conditions for 2016/2017, to permit firms to report claims or circumstances of which they are aware prior to expiry of cover to their insurer within three working days immediately following the end of the coverage period. Therefore, a three-working-day grace period from 30 November 2016 is in place with regard to notification of claims and circumstances to your insurer.

Quotes

Insurers are required to leave quotes to firms open for a period of not less than ten working days. This requirement was introduced in the 2012/2013 indemnity period and remains in place for the 2016/2017 indemnity period.

Amendments for 2016/2017

Amendments have been made to the Run-off Fund under the new regulations, which will come into effect on 1 December 2017, to increase the level of compliance of firms in the Run-off Fund with the Special Purpose Fund Manager with regard to claims and membership of the Run-off Fund.

Under these new provisions, three levels of run-off cover have been introduced, with effect from 1 December 2017, depending on the compliance of run-off firms:

  • Compliant run-off firms will have cover in the Run-off Fund with the same minimum terms and conditions as those that exist in the market,
  • Non-compliant run-off firms will have reduced cover in the Run-off Fund with the same minimum terms and conditions as those that exist in the market, with the exception that there will be no cover for claims by financial institutions,
  • ARP run-off firms will continue to have cover in the Run-off Fund at the same level that exist in the ARP, with aggregate cover and no cover for claims by financial institutions.

Further information on changes to run-off cover provisions can be found on the Society’s website at www.lawsociety.ie/PII.

Run-off Fund

The Run-off Fund provides run-off cover for firms ceasing practice:

  • That have renewed their PII for the current indemnity period, and
  • Subject to meeting eligibility criteria, including that there is no succeeding practice in respect of the firm.

Any firm intending to cease practice after 30 November 2016 is required to renew cover for the 2016/2017 indemnity period.

Any applications to the Run-off Fund for cover must be made directly to the Special Purpose Fund Manager, not the Society. Further information on run-off cover and succeeding practices, including the contact details of the Special Purpose Fund Manager, can be found on the Society’s website at www.lawsociety.ie/PII.

PII helpline

The Society continues to operate the PII Helpline to assist firms in dealing with PII queries. The helpline is available Monday to Friday, 10am to 4pm, to assist firms with PII queries. Telephone 01 879 8707 or email piihelpline@lawsociety.ie.