PII renewal

Professional Indemnity Insurance 02/11/2018

The mandatory professional indemnity insurance (PII) renewal date for all firms is 1 December 2018. This date is not negotiable. All cover under the current indemnity period will expire on 30 November 2018.

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 2018, 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 Wednesday 5 December 2018.

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 Wednesday 5 December 2018, 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 5 December 2018.

It is noted that some firms who have confirmed PII cover to the Society during 2018 have a coverage period that extends past 30 November 2018. Such firms are still required to reconfirm cover for 2018/2019 with the Society by 5 December 2018.

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.

Renewal resources

The guide to renewal for the 2018/2019 indemnity period will be published on the Society’s website on 2 November 2018 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 for the 2018/2019 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.

Financial strength rating

The Society introduced a new minimum financial strength rating requirement from a recognised rating agency for all participating insurers in 2017/2018, which remains in place for 2018/2019, of BBB (S&P, Fitch) or equivalent. The recognised rating agencies are Standard & Poor’s, Fitch, AM Best, and Moody’s. The Society also has the power to waive the minimum financial rating requirement for participating insurers subject to such terms and conditions as the Society deems fit, such as provision of a suitable parental guarantee from a rated parent company.

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.

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 2017 and 30 November 2018 (both dates inclusive) should be notified by the firm to their insurer by 30 November 2018.

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 notifications 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 2018/2019, 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 2018 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 2018/2019 indemnity period.

Amendments to cover

The following amendments have been introduced in the PII Regulations 2018 (SI 351 of 2018):

  • The definition of ‘firm’ has been amended, and a new regulation 3 has been proposed, to introduce an explicit requirement for every firm to have a principal, partner, or practice manager as appointed under section 31 of the Solicitors (Amendment) Act 1994, with a valid practising certificate in place, in order for the firm to be permitted to practise and provide legal services. If a principal, partner, or practice manager is not in place, or they do not have a valid practising certificate, the firm must immediately cease practising until the position is regularised. It should be noted that, where a principal is on short-term sick leave or on maternity leave, another solicitor can run the firm on their behalf and under their supervision. This will continue to be the case under the proposed new amendments.
  • The definition of ‘firm’ has also been amended to include reference to legal partnerships and multidisciplinary practices that have solicitor principals, in order to ensure that these are automatically covered should the relevant provisions of the Legal Services Regulation Act 2015 be commenced during the indemnity period. It should be noted that, as at the date of publication of this practice note, legal partnerships and multidisciplinary practices are not yet permitted.
  • The definition of ‘legal services’ has been clarified to include acting as a patent agent, registered trademark agent, or European trademark and design attorney.
  • Amendments have been made to the arbitration clauses in the regulations and minimum terms and conditions to introduce a requirement for both parties in arbitration to provide information on the arbitration to the Society on a confidential basis, and also setting out the detail that should be contained in that notification.
  • Clause 8.1 of the minimum terms and conditions was amended to provide that arbitration between an insurer and the insured solicitor firm can also be initiated with regard to disputes related to the insurer’s failure to confirm cover.
  • Clause 8.3 of the minimum terms and conditions was amended to transfer the power to direct an insurer to conduct any claim against an insured solicitor from the Society to the arbitrator in the case of claims disputes. Under the new amendments, the arbitrator will have the power, in appropriate cases and on an interim basis pending hearing or resolution of arbitration, to direct the insurer to conduct claims, advance defence costs, or pay claims.

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 2018 is required to renew cover for the 2018/2019 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.

Run-off compliance status

Amendments were made to the Run-off Fund under the 2016/2017 regulations, which came come into effect on 1 December 2017 and remain in place for the 2018/2019 indemnity period, 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 provisions, three levels of run-off cover exist, depending on the compliance of run-off firms:

  • Compliant run-off firms 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 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 is no cover for claims by financial institutions,
  • ARP run-off firms 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.

PII helpline

The Society continues to operate the PII Helpline to assist firms in dealing with PII queries. The Law Society’s PII helpline is available from Monday to Friday, 10am to 4pm, to assist firms with PII queries – tel: 01 879 8707, email: piihelpline@lawsociety.ie.