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REPCO reduction reflects commitment to risk-rating
Real estate and civil litigation continue to be the areas of practice with the highest claims, both in terms of count and cost. However, real estate claims based on the registration of fraudulent instruments under the Land Titles Act where the claim would otherwise be excluded from coverage due to the dishonesty of the insured lawyer – the risk targeted by the Real Estate Practice Coverage Option (REPCO) – have turned out to be rare.
When the Ontario bar opted, in 1995, to address the insurance crisis of that era by having LAWPROas an independent, regulated insurance company provide the primary professional liability program, it became clear that success depended on developing a program in which premiums were generally matched to risk (risk-rating).
The essence of REPCO coverage is to compensate for a specified type of fraud by the insured lawyer. REPCO coverage is a special protection to support the introduction of changes in the procedures for the registration of interests in land. Since the introduction of REPCO in 2008, LAWPRO has paid one claim. However, these types of claims often take several years to develop, and the fund created by the program must maintain enough in reserve for the payment of future claims not yet discovered. As the claims picture with respect to lawyer electronic registration fraud has unfolded, LAWPRO has responded with two reductions in the premium: from $500 down to $400 in 2010, and from $400 to $250 in 2012. The latest review of claims trends in this area has made it clear that a third reduction is possible.
As of the 2016 policy year, the premium for REPCO coverage − a pre-requisite for practising real estate law in Ontario − will decrease by $150: from $250 down to $100. This savings will be available to approximately 7,800 real estate practitioners.
Of course, updated risk-rating or a change in coverage terms could result in the REPCO premium being increased in a future year.
Real estate lawyers provide a vitally important service. LAWPRO is proud to support the work of the real estate bar with this REPCO