Premium stability is the result of nimble adjustments
LAWPRO’s base premium has held steady at $3,350 since 2011; but like a sailboat that tacks carefully first in one direction then the other to manage the wind, stability is the result not of a lack of change, but of continual adjustments to manage change.
For 2013, for example, the minimum premium period (for the purpose of refunds of premium if you cancel during a policy year) was reduced to 30 days from 60, and the company reaffirmed a pure claims-made approach to claims management. Also, LAWPRO began preparing to insure the paralegal partners in lawyer/paralegal partnerships.
In the May 2013 issue of LAWPRO Magazine, we explained how, in Ontario, the base premium for the primary program is only part of the story. In fact, many Ontario lawyers whose practices attract lower risk pay less than the base premium, while lawyers working in riskier areas pay more. Tailoring premium costs in this way ensures that the cost of coverage is appropriately risk-rated.
In 2013, LAWPRO provided E&O coverage to almost 24,300 lawyers, an all-time record number, up from about 23,600 in 2012.
Personalized assistance over the phone
As the profession grows, the customer service department works to promptly and courteously address a growing volume of inquiries.
Inbound calls to LAWPRO in 2013 increased 7.9 per cent over the previous year. Customer service representatives handled a total of 31,524 calls. Almost half of these were about coverage: requests for additional coverage, changes in practice status, or inquiries regarding options such as innocent party coverage.
Convenient online tools to help you manage your coverage
New customer service initiatives were introduced in 2013 to help lawyers manage and maintain their insurance status via the secure
“My LAWPRO” section of the LAWPRO website. These included:
- The creation of a new “Risk Management Credit” tab to allow lawyers to file their online declaration and to see current and past years’ credits claimed;
- To assist lawyers whose clients require proof of insurance (and are not satisfied with a copy of the lawyer’s policy declarations page), access to on-line issuance of certificates of insurance; and
- The introduction of French language policy-related documents, including pre-populated renewal forms.
The 2013 claim figures reflect an ongoing trend – continued elevated claims counts and costs. The information currently available suggests that ultimate claims expenses for the year will be in line with recent years: definitely above the $80-90 million range and possibly exceeding $100 million, when internal claims handling costs are included.
Not only is LAWPRO experiencing a high volume of claims reported – the number of open files now stands at over 3,600, the highest it has been in the last decade − but the average cost of a 2013 claim is expected to be over $37,000, as compared to approximately $30,000 ten years ago.
One glimmer of good news emerged this year: the claims rate – which we express as a ratio of claims made per 1,000 lawyers – moderated slightly to 104 from last year’s alarming 108.
While a moderating claims rate is encouraging, the claims causeof- loss data is much less reassuring.
The 2012 uptick in claims based on time management errors was more than just a fluke – time management claims remained high in 2013, largely driven by administrative dismissal-related claims. This category of claims can be particularly costly, because if the claim relates to a missed limitation period, the claimant generally alleges that the lawyer is responsible for the lost right of action (and the related lost access to damages).
While the increase in time management claims is cause for concern in the plaintiff litigation area, communication-related errors generated the largest number of claims across every other major area of law.
Claims by area of practice
The leader of the claims pack, in terms of area of practice, continues to be real estate: real estate claims accounted for 36.3 per cent of all claims costs reported to LAWPRO in 2013, despite a slowing of the real estate market in some parts of Ontario. Due to the increase in time management errors, litigation claims increased, accounting for 32.7 per cent of total claims, as compared to 25.5 per cent 2012. There was a steep drop-off in corporate-commercial claims, and claims in all other areas of law remained relatively stable.
The Rules of Professional Conduct and the terms of the LAWPRO insurance policy require lawyers to report all claims as promptly as possible, even if the likelihood that the claim will be successful is relatively low. In many cases, early reporting gives LAWPRO a better shot at “repairing” an error and reduces the likelihood of an allegation of late reporting which could jeopardize coverage altogether.
Contacting us at the earliest opportunity – as soon as you realize that something may have gone wrong (which often means before a claim has been threatened or made, or even before the client has discovered the error) – allows the best opportunity to recommend a course of action to handle the claim. Because most claims are the result of circumstances or errors seen before, LAWPRO counsel have the benefit of many years’ cumulative experience with claim avoidance and repair.
Reporting an error or potential claim alone has no negative impact on your insurance premium (though costs associated with repairing a claim may trigger a deductible). Only 15 per cent of claims closed in 2013 required an indemnity payment.
Experience means knowing which claims to defend
LAWPRO’s claims resolution philosophy is simple: resolve claims quickly in situations where there is liability, defend vigorously if the claim has no merit, and avoid economic settlements. Our annual survey of insureds with a closed claim reflected a high level of satisfaction with our claims resolution processes and results.
LAWPRO counsel also participate in seeking resolution of many claims via negotiation, mediation and arbitration. They also take all reasonable steps to recover costs through the enforcement of judgments and costs orders, and by pursuing reimbursement from third parties.