Download Article as PDF


cover of May 2012 lawpro magazine

Claims costs in primary program may top $90 million in 2011

Lawyers are reporting more claims

The increase in the number of claims reported can be attributed in part to an increase in the number of lawyers insured under the Law society e&O program – to just over 23,000 in 2011 from about 18,000 in 2001, a 28 per cent increase.

Even when we adjust for this increase – by calculating claims per 1,000 lawyers in practice – we see that the number of claims being reported is higher than it has been at any time in the last decade. Claims frequency in 2011 stood at 107, up from 99 in 2010 and higher than the previous peak of 104 in 2002.

Lawyers are reporting more claims

The increase in the number of claims reported can be attributed in part to an increase in the number of lawyers insured under the Law society e&O program – to just over 23,000 in 2011 from about 18,000 in 2001, a 28 per cent increase.

Even when we adjust for this increase – by calculating claims per 1,000 lawyers in practice – we see that the number of claims being reported is higher than it has been at any time in the last decade. Claims frequency in 2011 stood at 107, up from 99 in 2010 and higher than the previous peak of 104 in 2002.

Claims are more complex and costly

Between 1999 and 2009, claims in the $100,000 to $500,000 range increased 122 per cent (from 127 in 1999 to 275 in 2009):

  • Claims in $100,000 to $250,000 range were up 132 per cent
  • Claims in the $250,000 to $500,000 range were up 89 per cent
  • Claims over $500,000 were up 89 per cent.

Between 2001 and 2009, the average cost of a claim increased 37 per cent:

  • in 2001, the average cost was $30,720
  • in 2005, the average cost was $36,655
  • in 2007, the average cost was $40,202
  • in 2009, the average cost was $41,971

Real estate, litigation represent biggest risk increase in real estate claims outpaces other areas of practice

Real estate 185% increase ($11.9m to $33.9m)
Litigation 26% increase ($16.6m to $20.9m)
Corporate, bankruptcy, IP, security, tax 38% increase ($16.6m to $22.9m)
Family 51% increase ($3.3m to $5.0m)
Wills, estates 89% increase ($3.6m to $6.8m)
Other 238% increase ($1.3m to $4.4m)

Between 2001 and 2009, real estate claims costs increased 185 per cent (based on numbers available as of February 28, 2012). housing prices in Ontario for the same period increased 90 per cent (source: CREA).