Explain the difference between annual PI policies and single project cover?
• Individual practices and businesses normally have policies that are renewable annually. This covers them for all the work they undertake and all projects in the conduct of their business during that annual cycle.
• Single project insurance is procured for a specific project, which requires large limits of indemnity and covers the entire professional team for the duration of that project only. This is a timebound policy.
When it comes to annual renewals – is a No Claims Declaration (NCD) acceptable vs. submitting a 12-page proposal form every year?
• There’s a 1-page document that ITOO has for clients and broker partners such as Econorisk. However, every 3-years we do have to insist on filling out the full document!
• In most cases, an NCD will do.
Are you seeing many claims against insurance brokers in general?
• Yes – the industry has seen an increase in broker claims. Rightly or wrongly, as soon as a client’s claim is rejected, the broker is held responsible.
• Even though it is one of the most regulated industries in terms of compliance, brokers still require PI.
• We are pleased to report that, since inception, Econorisk has never had a claim laid against the business – but are firm believers in very adequate cover!
• Econorisk holds well in excess of the mandated PI cover for this reason.
Misappropriation of trust funds is a scam that has hit attorneys – and the scale of these attempts is of such magnitude that PI cover is essential. Does the Attorneys Insurance Indemnity Fund (AIIF) provide ample cover?
• While the AIIF provides comprehensive professional insurance indemnity free of charge as part of the fund, it is limited. ITOO offers both top-up and drop-down cover to ensure the flexibility of PI at different stages for attorneys.
• The AIIF does not provide cover for misappropriation of Trust Funds. It is vital for attorneys to procure top-up policies, which do provide that protection.
Are the claims amounts ‘costed in’ on ITOO policies vs. being a deductible through the AIIF? How do you differ?
• A deductible = the excess first amount payable by the insured in respect of any claim, before the insurer is obliged to provide cover in terms of the policy.
• Deductibles generally apply to legal and investigation costs, however some insurers’ (ITOO/Hollard) deductibles apply to damages awarded only.
• Usually, the higher the deductible, the higher the premium discount.
• Insurers favour the insured’s appetite for higher self-insurance levels and reward them accordingly.
Who deals with an attorney’s PI claim – the AIIF or ITOO? If both, this must add a level of complexity to claims – how do you manage that?
• The claim must be reported to both the AIIF and ITOO.
• Depending on the quantum of the claim, the AIIF will run with it, or give ITOO the opportunity to take over the claim.
• We have a panel of attorneys for the insured to choose from or they can use their own – if there are compelling reasons to do so.
• We are in constant contact with the AIIF and vice versa until the claim is resolved.