The $125 increase is the first in 10 years and is the result of increased claims costs and declining premium revenues from transaction levies. Between 1995 and 2004, premium levels fell consistently from a high of $5,600 to $2,500 in 2003 and 2004.

Premiums for many lawyers in 2005 will be significantly below the base $2,625 mark, with some lawyers paying as little as $1,178, depending on the practice and coverage options selected. Premiums for other insurance coverage, transaction levies and discounts will remain the same as they were in 2004.

The increase in the base premium is the result of two diverging trends: Claims costs, which have remained in the $65 million range in earlier years, have increased in 2004. This increase can be traced to fraud-related claims as well as those resulting from incivility, shortcomings in client loyalty and conflicts.

At the same time, premium revenue from transaction levies is expected to continue to decrease. In particular, real estate transaction levies have declined, reflecting an increase in the use of title insurance.

Revenue to meet the forecasted $78.5 million in total costs for the insurance program in 2005 will come from three sources: $48.6 million from base premiums (based on 19,800 insured lawyers); $21.2 million from transaction and claims history surcharge levies; and $8.7 million from the premium stabilization fund.

Law Society-approved indemnification agreements a must for title insurers
The 2005 policy will be changed to more consistently protect lawyers against claims arising out of title-insured transactions.

The policy presently exempts lawyers and law firms from having to pay the $50 real estate transaction levy surcharge for transactions that are title insured, provided the title insurer has waived its rights and agreed to indemnify and save harmless the lawyer/law firm against claims arising under the title insurance policy or policies. This exemption reflects the core insurance program's reduced exposure to claims in situations where this protection is in place for lawyers.

Effective January 1, 2005, the professional liability insurance policy will be changed so that the exemption from having to pay the real estate transaction levy surcharge applies only in situations where the title insurer has entered into a release and indemnity agreement in a form satisfactory to the Law Society. This change will minimize the administration required of lawyers and law firms, and will ensure that the required release and indemnity agreement is in place on a consistent basis.

The bar will be advised of which title insurers have entered into release and indemnity agreements satisfactory to the Law Society. In situations where the title insurer does not provide this type of agreement, lawyers acting on these transactions - even if they are title-insured - will have to pay the real estate transaction levy surcharge.

The $100 drop in the base premium to $2,700 from $2,800, is the fifth consecutive decline in insurance premiums. Actual premiums paid by many lawyers will be lower, depending on a number of variables such as options selected, years in practice and practice areas.

The policy/forms packages that went to all law firms in late 1999 made reference to key payment and filing dates for premiums and transaction levies for 2000. Key dates to add to your diary are as follows:

April 30, 2000
Deadline for filing forms exempting yourself from having to pay the real estate or civil litigation transaction levy surcharges for 2000. Exemption forms are included in the 2000 Levy Surcharge and Exemption Forms booklet.
NOTE: All lawyers must file either a transaction levy form each quarter, or a form exempting themselves from payment of the real estate and/or civil litigation transaction levy surcharges.

April 30, July 30, October 31, 2000 and January 31, 2001
Real estate and civil litigation transaction levies and forms are due and payable.

Note that you can now electronically complete your quarterly transaction levy surcharge forms. Go to File Online.

Premiums for 2000 now due

January 15, 2000 is the date by which the first instalment payment for the 2000 insurance premium is due and payable. Firms who opt to pay their liability insurance premium in 2000 by either monthly or quarterly instalments must have provided LPIC with payment (cheque, debit card or cash) or payment information (credit card or pre-authorized payment authorization) by this date.

Information on payment deadlines was included in an invoice and policy package mailed in December by LPIC to all lawyers who completed a 2000 liability insurance application.

Included in the package are:

• an invoice reflecting the firm's insurance premium, based on information submitted on the 2000 application;
• an instructions sheet detailing how to pay the required premium;
• a copy of the current year's professional liability insurance policy; and
• a booklet containing exemption forms and forms for transaction levies that must be paid in 2000 (see key dates for details).

If your firm has not yet received a policy and invoice package for the 2000 insurance program, please contact Customer Service at (416) 598-5899 or 1-800-410-1013 or send an e-mail to service@lpic.ca.

Professional liability insurance in 2000

Base premium falls to lowest levels in five years

Insurance premiums for many Ontario lawyers will fall by up to $650 per lawyer in 2000, bringing premiums to their lowest levels in five years.

Base premium set at $3,150

The 2000 base premium will be $3,150 per lawyer, $500 less than in 1999 and $2,450 less than in 1995, the year LPIC assumed responsibility for managing the Law Society's Errors and Omissions program.

Premiums for Mandatory Innocent Party Coverage (required of all lawyers in partnerships and associations, among others) will fall by $150, to $250 per lawyer from $400.

The $3,150 base premium applies to the standard insurance program that provides coverage of $1 million per claim/$2 million in the aggregate with a $5,000 DEDUCTIBLE applicable to claim expenses and indemnity payments. Actual premiums can be lower, depending on the options selected.

For example, part-time practitioners and lawyers who restrict their practice to criminal and/or immigration law will pay a base premium of only $1,890 in 2000.

LPIC insurance premiums to fall to lowest level in five years

Insurance premiums for many Ontario lawyers will fall by up to $650 per lawyer in 2000, bringing premiums to their lowest levels in more than five years.

Base premium set at $3,150
The 2000 base premium will be $3,150 per lawyer -- $500 less than in 1999 and $2,450 less than in 1995, the year LPIC assumed responsibility for managing the Law Society's Errors and Omissions program.

Premiums for Mandatory Innocent Party Coverage (required of all lawyers in partnerships and associations, among others) will fall by $150, to $250 per lawyer from $400.

The $3,150 base premium applies to the standard insurance program that provides coverage of $1 million per claim/$2 million in the aggregate with a $5,000 DEDUCTIBLE applicable to claim expenses and indemnity payments. Actual premiums can be lower, depending on the options selected.

For example, part-time practitioners and lawyers who restrict their practice to criminal and/or immigration law will pay a base premium of only $1,890 in 2000.

Transaction levies maintained as premiums
Revenues from the real estate, civil litigation and claims history levies again will be applied as insurance premiums in 2000.

Maintaining these levies as premiums ensures an element of risk rating in the insurance program; real estate and civil litigation continue to represent a disproportionate risk when 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.

Excess insurance premiums drop up to 35 per cent
Excess insurance premiums for 2000 also are down between 10 and 35 per cent for most Ontario firms – a savings of up to $190 per lawyer for those in the lowest risk category. For details see LPIC's 2000 Excess program offers more for less.

1999 insurance program highlights

Base premium down 20%
Base premiums for Ontario lawyers will fall $1,000 in 1999 to $3,650 from $4,650 in 1998 - a decrease of more than 20 per cent.

The $3,650 base premium applies to the standard insurance program that provides coverage of $1 million per claim/$2 million in the aggregate with a $5,000 DEDUCTIBLE applicable to claim expenses and indemnity payments. Actual premiums can be lower, depending on the options selected.

Lawyers who qualify for the part-time practice and restricted area of practice (i.e., practise only criminal and/or immigration law) options will continue to be eligible for a 40 per cent premium discount and will pay a reduced base premium of $2,190 in 1999.

Some surcharges maintained but applied as premiums for 1999
Acting on recommendations made by various sectors of the bar, and consistent with the increased claims risk associated with these areas of practice, Convocation has approved a proposal to maintain the $50 surcharges that apply to civil litigation and real estate transactions. The claims history surcharge also will be maintained, but the volume levy surcharge will be discontinued for fiscal years ending after December 31, 1998.

Insurance premiums in 1999 therefore will consist of the base premium plus transaction and claims history surcharges, if any.