Cima Members In Practice Pi Scheme 2011

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Heythrop Park Conference 2011

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Cima Members In Practice Pi Scheme 2011

  1. 1. Members In Practice P I Scheme Sennet Advisory Services Malcolm Richards
  2. 2. <ul><li>PI Trends </li></ul><ul><li>CIMA Members PI Scheme </li></ul><ul><li>Risk Management – Simon Mason </li></ul><ul><li>Q&A’s </li></ul>
  3. 3. Double Dip or Not
  4. 4. Survey Results February 2010 <ul><li>27% of respondents expect All Professions Open Market rates to rise by ? </li></ul><ul><li>10% </li></ul><ul><li>When specifically asked only 18% expected rates for Accountants to rise in line. </li></ul><ul><li>64% expect rates to remain at 2009 levels </li></ul><ul><li>Interestingly 18% expect falls of ? </li></ul><ul><li>10% </li></ul>
  5. 5. <ul><li>Anticipated Claims activity </li></ul><ul><li>82% expect increase on 2009 levels </li></ul><ul><li>18% expect the increase to be substantial </li></ul><ul><li>64% expect Cost of claims in 2010 to be ? </li></ul><ul><li>Higher than 2009 </li></ul>
  6. 6. <ul><li>2008 Underwriting results show the combined ratio across the market was 90.6% </li></ul><ul><li>(ratio of claims paid and outstanding compared to premium income) </li></ul><ul><li>Rise from 70.1% in 2007 ( a big increase year on year) </li></ul><ul><li>When Underwiters expense ratios, typically being mid 20% range, are taken in to account ? </li></ul><ul><li>UK Market moved firmly into a loss </li></ul><ul><li>2009 and 2010 unlikely to improve. </li></ul>
  7. 7. 2010 <ul><li>S A S vision </li></ul><ul><li>Rob Ward Lead Underwriter </li></ul><ul><li>Mitsui – Big Ticket PI – Top 100 Practices </li></ul><ul><li>David Kenyon-Vaughan LLB -FSA Compliance </li></ul><ul><li>Malcom Richards - Consulting </li></ul>
  8. 8. Notifications <ul><li>What is a Claim Circumstance? </li></ul><ul><li>A professional Indemnity Insurance Policy normally requires that any circumstance which “ may ”, “ might ”, “ could ” or is “ likely to ” give rise to a claim is notified to Underwriters as soon as the Insured becomes aware of this occurrence. </li></ul><ul><li>“ May”, “might” “could” are different words used by different Insurers so you ought to familiarise yourself with the specific wording of your policy. </li></ul>
  9. 9. <ul><li>As a general guide a “Circumstance” can be any of the following: </li></ul><ul><li>Any intimation of an intention or a threat to claim against you </li></ul><ul><li>Any direct or indirect criticism of your professional services whether expressed or implied which could give rise to a loss to a third party </li></ul><ul><li>Any direct or indirect criticism of a party for whom and for which you are responsible, whether expressed or implied, which could give rise to a loss to a third party </li></ul><ul><li>Any awareness that you have of a shortcoming of your work or doubt about the efficacy of your performance which could give rise to a loss to a third party </li></ul>
  10. 10. <ul><li>It must be stressed that whether you regard any criticism as justified or not it does not remove the obligation to notify Insurers. </li></ul><ul><li>The fact that you are aware of such an occurrence at all triggers the notification provisions. </li></ul><ul><li>  The Importance of Timely Notification </li></ul><ul><li>It is no longer a Condition Precedent to any indemnity that you promptly notify Insurers of claims or circumstances of which you first become aware of during the policy period. </li></ul><ul><li>If this condition is not met then Insurers can repudiate the notification and refuse indemnity. Thus the financial consequences to you are serious. </li></ul>
  11. 11. <ul><li>If you fail to notify and your policy renews in the intervening period before notification is eventually made, then in addition to having the claim denied Insurers could elect to void the policy ab initio for failure to disclose information material to the underwriting of the risk. </li></ul><ul><li>The Claims made nature of the policy differs from the majority of other policies of Insurance. Your risk is assessed based on the information provided on the proposal form which includes details of all claims and circumstances which you are aware of at the time. All of which is taken into consideration when renewal terms are offered . </li></ul>
  12. 12. <ul><li>Summary </li></ul><ul><li>If you have to think about whether you should notify or not then notify. </li></ul><ul><li>When considering whether to notify a circumstance you should ignore: </li></ul><ul><li>The amount of any loss - even matters which clearly fall below your policy excess should be notified </li></ul><ul><li>Whether the facts as stated are accurate </li></ul><ul><li>Your own personal views on any liability </li></ul>
  13. 13. <ul><li>If a claim is made against you, please remember that when dealing with the claimant or their representatives you must not :- </li></ul><ul><li>Make any admissions of liability </li></ul><ul><li>Make any offers of settlement without the prior agreement of insurers </li></ul><ul><li>Disclose to any party that you have notified your professional indemnity insurers </li></ul><ul><li>There are legal protocols applying to all professional negligence claims which impose time constraints and procedural rules as to how claims should be dealt with. It is most important that claims are notified immediately. </li></ul>
  14. 14. Members P I Scheme <ul><li>Critical mass and Institute Accreditation means best possible rates, bespoke policy wording Open to all CIMA Members In Practice </li></ul><ul><li>One point of contact in Canterbury Office </li></ul><ul><li>Dedicated service and claims handling </li></ul><ul><li>Inclusive Fishburns Legal Helpline </li></ul>
  15. 15. Benefits <ul><li>Fishburns solicitors' assistance to insured’s covered under the CIMA Members In Practice Scheme. </li></ul>
  16. 16. <ul><li>i) fee recovery advice; </li></ul><ul><li>ii) accountants' disciplinary procedures; </li></ul><ul><li>iii) requests for assistance in other legal proceedings relating to an insured's work (e.g. providing factual witness evidence); </li></ul><ul><li>iv) requests for release of files or documents held by an insured. </li></ul>
  17. 17. <ul><li>This advice will be provided by way of a telephone helpline (with a specific, dedicated telephone number) which will be operated during normal working hours. </li></ul><ul><li>At their discretion, Fishburns may provide discounted hourly rates for insured members where there are professional negligence related issues which Fishburns can help with, which do not fall within the scope of the Scheme's PI cover. </li></ul>
  18. 18. Risk Management <ul><li>Letters of Engagement </li></ul><ul><li>ICAEW revised wording in September 2010 </li></ul><ul><li>Fishburns solicitors' assistance to insured’s covered under the CIMA Members In Practice Scheme. </li></ul><ul><li>Simon Mason </li></ul>
  19. 19. Q&A’s Malcolm Richards [email_address] Rob Ward [email_address] 01227 781200 Office 07800500305 Mobile

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