Report to Convocation Highlights

At its September 24, 1999, meeting, Convocation accepted recommendations made by LPIC in its annual Report to Convocation on the insurance program.

Report highlights:

E&O Fund deficit retired early
The $203.6 million required to retire the E&O Fund deficit and capitalize LPIC were available by the end of February 1999, four months earlier than forecast. As there are now sufficient assets in the E&O fund to cover its outstanding liabilities, the investment income, which is surplus to the obligations of the Fund and is estimated at $2 million, will be made available to the Law Society for general purposes in 2000.

Program costs stable
Based on current trends, LPIC is projecting about 2,000 new claims and claim costs of about $65 million for 2000, consistent with loss costs for 1997-99. LPIC projects profits of $5.4 million for the insurance program in 1999.

Premiums fall
Base premiums in 2000 will fall to $3,150 per lawyer. Real estate and civil litigation transaction levies, and claims history levies, which will generate an estimated $25 million in revenues in 2000, will be maintained and applies as premiums, enabling LPIC to reduce premiums by $500 to the $3,150 level.

Premiums for Mandatory Innocent Party Coverage will fall by $150, to $250 per lawyer from $400, reflecting a reduction in loss costs for this exposure.

Premium discounts for e-filing by November 1 will be $50 per lawyer. Premium discounts for paying insurance premiums in a lump sum will be $150 per lawyer.

Risk-rating the program
To ensure premiums generally reflect the risk associated with practice, the real estate, civil litigation and claims history levies will be maintained in 2000, and again applied as premiums under the insurance program.

This decision is based on statistical analyses which confirm that real estate and civil litigation represent a disproportionate risk compared to other areas of practice, and lawyers with a prior history of claims are statistically more likely to generate a subsequent claim than lawyers who are claims free. In 1998, these two areas of practice accounted for 67 per cent of claims reported and 62 per cent of claims costs.

The impact of civil litigation claims continues to grow: in 1998, these claims accounted for 27 per cent of claims costs compared to 21 per cent in 1997. The nature of these types of claims too is changing: more than 66 per cent of civil litigation claims were attributed to the general handling of the matter (eg. poor communication, procrastination, failure to follow instructions), while only 33 per cent were due to missed limitation periods.

The millennium exposure
In the past year, LPIC undertook several initiatives (articles, application questions, surveys) to raise lawyers' awareness of the hardware and software issues related to the year 2000. Based on its own feedback and surveys, LPIC believes that a majority of the profession expect their systems and software to be year 2000 compliant. It also does not expect the Year 2000 compliance issue to have a significant impact on the insurance program's claims results.

Contact LPIC Customer Service to order a copy of the full report.

LLPs should take a second look at need for excess insurance coverage

Lawyers who intend to change their firm into a limited liability partnership (LLP) should take a second look at the level of insurance coverage they maintain and the protection it provides to their clients.

LLPs, as approved by the Law Society this spring, limit the liability of partners for the negligence of another partner or employee to the partnership. Under an LLP, individual partners are not personally liable for the errors or omissions of another partner or employee supervised by that other partner; nor are they personally liable for the dishonest, fraudulent, malicious or criminal acts of such a partner or employee. Thus, if a claim arises that could result in damages that exceed the assets of the partnership, an LLP protects the personal assets of the partners not directly involved.

One of the requirements of an LLP is that the partners advise clients about the extent of their liability within the limited liability partnership. Lawyers in LLPs will want to reassure clients that the firm - now an LLP - carries substantial insurance protection.

One way to provide that assurance is through excess insurance coverage. Excess insurance provides firms with additional insurance protection over and above the $1million per claim/$2 million in the aggregate provided through LPIC. For example, LPIC's excess insurance program provides coverage limits of $4 million per claim/$8 million in the aggregate above the $1 million/$2 million base limits.

MDP insurance issues to be finalized

Insurance requirements of multi-discipline partnerships that are approved by the Law Society are in the process of being reviewed and finalized.

As things now stand, MDPs must, as part of the application process, provide the Law Society with details of insurance for each non-lawyer partner in the MDP; each non-lawyer partner must carry the minimum $1 million per claim/$2 million in the aggregate coverage required of all lawyer partners. Firms that have in place excess insurance and apply to be MDPs must also provide proof of parallel excess coverage for the non-lawyer partners. Full details, however, are still being finalized and should be available by fall.

The role of LPIC, insurance rates, underwriting requirements and related issues are among the subjects under discussion between LPIC and the Law Society.

Lawyers interested in the multi-discipline partnership concept should note that MDPs, as approved by the Law Society, must meet a number of criteria:

• MDPs will continue to be law practices, in which the services of non-lawyers support or enhance the delivery of the legal services in the practice;
• Non-lawyers in an MDP must be actively involved in providing services in their areas of expertise in the practice;
• Non-lawyers in an MDP are to provide services only to clients of the MDP; they cannot provide services to non-MDP clients from within the premises of the multi-disciplinary partnership, but instead must maintain separate facilities if they intend to practise their trade, profession or occupation outside of the MDP.
• Effective control of the practice must rest with the lawyer partners;
• Lawyer partners are responsible for ensuring that non-lawyer partners comply with the Law Society rules and regulations, and that the services provided by non-lawyers are of an appropriate level of skill and competence;
• Only individuals, and not corporations or organizations, can join in a MDP with lawyers.

LPIC's 2000 Excess Insurance program offers more for less

LPIC has launched a new and improved Excess Insurance program that reduces premiums for most lawyers and provides higher coverage limits.

Lower Excess premiums: LPIC's Excess premiums for most Ontario firms will decrease by 10 to 35 per cent for the year 2000 program – a $190 saving for lawyers in the lowest risk category. For excess policies that come into effect in January 2000, LPIC will rate firms individually, based on criteria such as claims history and areas of law practised, rather than using a flat premium structure.

Higher coverage limits: Each of the following limits is provided on a FIRM basis, above the $1 million per claim/$2 million in the aggregate limits provided to each LAWYER insured under the primary LPIC insurance program:

$1 million per claim/$2 million in the aggregate
$2 million per claim/$4 million in the aggregate
$3 million per claim/$6 million in the aggregate
$4 million per claim/$8 million in the aggregate
NEW:
$9 million per claim/$18 million in the aggregate

The benefits of LPIC's Excess Insurance program

Efficiency and security: Having only one contact for all liability insurance needs means less administration and duplication for firms, and fewer worries. If there is a claim, the firm reports it once, to LPIC; reporting automatically triggers both your primary and excess coverage and eliminates the likelihood that coverage will be denied because the lawyer failed to fully inform all required insurers.

Experience and expertise: LPIC has a proven track record in resolving lawyers' liability claims equitably, efficiently and expeditiously. Placing excess insurance coverage with LPIC ensures consistency in the way a claim is handled, eliminates chance of disputes between insurers and can result in a quicker resolution to a claims file.

Consistent, comprehensive coverage: LPIC's Excess Insurance program builds on the coverage provided under the primary LSUC/LPIC program, reducing the possibility of gaps in coverage because of inconsistencies in the policies.

Preliminary estimate for Excess Coverage in the mail

To illustrate how cost-effective LPIC's 2000 Excess package really is, LPIC is providing firms with a preliminary estimate for Excess Coverage. The estimate will be mailed in the next few weeks to the managing partner, along with a detailed information package on LPIC's Excess Insurance program.

Why buy Excess insurance?

Most practitioners underestimate their exposure to claims – and to the potentially ruinous impact of claims that exceed the $1 million per claim/$2 million in the aggregate coverage provided each lawyer under the primary LPIC insurance program.

Assess Your Insurance Needs helps you determine why excess insurance is an option you should be considering.
Excess Insurance Coverage outlines excess options available to your firm.
To apply for LPIC's Excess Insurance program, complete the online Excess Insurance Application.

You can also contact the LPIC Customer Service Department by e-mail at service@lpic.ca. or at the numbers below:
Tel: 1-800-410-1013; in Toronto (416) 598-5899
Fax: 1-800-286-7639; in Toronto (416) 599-8341

LPIC expands 1-800 service

LPIC key contact list

By telephone: 1-800-410-1013 (from anywhere in North America, including Toronto)

(416) 598-5899

By fax: 1-800-286-7639

(416) 599-8341

By e-mail: For liability insurance: service@lpic.ca

For TitlePLUS: TitlePLUS@lpic.ca

For practicePRO: practicepro@lpic.ca