Professional Insurance Presentation to
Contents
“Past performance is no guarantee of future performance”
Steady increase in notification and cost � in recessionary years Dramatic increase in notifications the � last 3 years 7 Claims paid or with reserves over � € 3,000,000 � Two claims paid over €6,5m � Professional Indemnity Claims – A Bleak Picture
Increase in counter claims when fees are � collected Size of Claims increasing � Professionals Caught as “last man � standing” What has happened from 2008 to date
Have Construction professionals suddenly stopped • being competent? No Are they doing things differently or in a way more • risky than before? Perhaps Have clients become more demanding and claims • aware Certainly ! Professional Indemnity
Where do claims come from? • Planning • Poor Workmanship • Project Management • Defective workmanship • Fire safety • Valuation • Supervision of contractors • Incorrect assessment , timeframe Professional Indemnity
When to Be alert When the client becomes insolvent or goes bankrupt • When there is a fee dispute • When the client is being investigated by external • regularity body Such as the HSA or Government Agency • Professional Indemnity
Ways of Avoiding Losses • Risk Management � Starts with Partners & Senior staff � Structure and organisation � Responsibility and Supervision Professional Indemnity
Ways of Avoiding Losses • Appointment of Practice review manager Leadership from the top � Quality Objectives � Practice Planning � Review and effectiveness of systems � Professional Indemnity
• Quality Management System Concentrate on effectiveness Staff involvement Continuous process Quality culture – customer satisfaction Maintain effective diary system, with some form of check Maintaining good telephone messages Professional Indemnity
Ways of Avoiding Losses Quality Management System- • examples of exposure Absent / incomplete documentation � Absence of Terms of engagement � Staff operation outside authority � Absence of reports/ disclaimers � Recruitment failures- references � Professional Indemnity
Ways of Avoiding Losses Evaluation of new / existing clients • Clients instruction, nature of work, co operation � necessary, completion dates Credibility of Management � Quality of financial / managerial controls � Fee to work carried out � Potential problems � Professional Indemnity
Ways of Avoiding Losses • Evaluation of new / existing clients Examples of High Risk Work � Financial stability of client Complexity of contract Funding Major Property transactions Professional Indemnity
Ways of Avoiding Losses • Letters of Engagement � Use Letters of engagement for all work � Limit Liability on the letter � Clear statement of purpose –reports / opinions especially one off cases � Disclaimer wording � For discussion only – on draft copies � Statement regarding restriction of circulation Professional Indemnity
EXAMPLE EXTRACTS TO INSERT INTO AN ENGAGEMENT LETTER FOR THE COMPILATION � OF THE UNAUDITED FINANCIAL STATEMENTS OF A LIMITED COMPANY Liability provisions � We will perform the engagement with reasonable skill and care. The total � aggregate liability to the Company and the Board of Directors, as a body, of whatever nature, whether in contract, tort or otherwise, of [insert name of Professional Firm ] for any losses whatsoever and howsoever caused arising from or in any way connected with this engagement shall not exceed [ insert amount ] This is an example of a liability cap only, which will be one of a number of � provisions relating to the liability and any limitations thereon. For example, the liability provisions will need to make it clear that you are not seeking to exclude those liabilities (such as liability for their own fraud) which cannot be excluded by law. Members may also wish to consider guidance issued in the Institute ’ s � Rules of Professional Conduct – Professional Indemnity Insurance Regulations and Guidance Professional Indemnity
Ways of Avoiding Claims Avoid free advice • Agree Fee or rating structure prior to commencement • If relying on specialist opinion ensure the client knows • where this advice has come from Professional Indemnity
Claims � Concentrates the insured in respect of the claim against them � Clarify the insureds understanding of the claim against them � Provides a starting point for investigation � Permits and desk study of the incident Professional Indemnity
Claims / Complaints how to handle them � Fully Investigate the facts � Evaluate the issues and evidence � Do not solely rely on insured recollection of events � Obtain a complete & Detailed account of Claimants case � Collate all the information � Identify and highlight differences of opinion Professional Indemnity
Claims / Complaints How to handle them � Set a specific long term claims / complaints handling plan. � Identify in writing all the salient points of the incident � Investigate as fully as possible immediately- Crystallise the issues � Weigh up the strengths and weaknesses of both sides � Try to evaluate from an independent point of view � List the sums applicable consider your liability & quantum Professional Indemnity
Claims / Complaints how to handle them � Meet with, or make contact with Solicitors, Experts, Your Broker, and others immediately to obtain their contributions to: � Further investigation and evidence required � Appraisal of Liability and quantum � Steps to be adopted to bring settlement / closure � Adopt and Develop ideas for settlement � Continue the dialog until everyone agrees the route to follow Professional Indemnity
Emerging Risks New exposures � Cyber Liability / Data Protection � Employment Related Risks � Environmental Risks Professional Indemnity
What is Cyber Risk ? •The business risk associated with the use, ownership, operation, involvement of IT •Attacks can occur from: • Rogue employees • Negligent Employee • Company outsiders • Vendors • Social networking Cyber Liability Insurance
Why Buy New Crime • Threats from Employees , Social Networking and Media , BYOD • Loss of data, industrial espionage, extortion, identity theft • Policy cover • Breach Costs Cyber Business interruption Hacker Damage Cyber Extortion Privacy Protection Media Liability Premiums start from €500 • Cyber Liability Insurance
Why Buy Increased focus on good corporate governance • highlighting Directors responsibilities Increase in Directors Responsibilities – • requirements for compliance statements in 2005/ 2006 Directors Liability is unlimited. • Personal Assets required to defend claims if no • cover Directors and Officers Liability
Employment Practice Liability
What Does it cover • Claims brought by employees against the company or other employees in respect of employment related issues. • Covers judgements, settlements and defence costs Employment Practice Liability
Why Buy Increased frequency of claims / incidents • Employees more aware of their rights • No cap in payouts for civil claims • Increased Immigration resulting in increased • discrimination Employees may pursue claims in parallel at the • employment tribunal, Labour court, H&S Employment Practice Liability
Exposures Brown Field site surveys • Pollution issues • Site contamination • Health and Safety issues • Environmental Risks
Why Arachas Professional Indemnity “A” Rated Insurers • In House Underwriting Exclusive facility • Claims Control • Competitive Pricing • Easy Renewal / Guaranteed Renewal • Wide Policy Wording • Pollution Cover automatically included • Professional Indemnity
� Special Risks Insurance ( PI, D&O, EPLI, PTL ) � Specialist Insurance facilities � Construction and Allied trades � Financial Services – Life Pensions, Income Protection � Personal Lines – Household and Motor Arachas Facilities
Can you make better use of your taxes? Did you know …… • You can protect your lifestyle in the event of loss of income due to sickness Tax Efficiently • You can provide financial security for loved ones in the event an untimely death Tax Efficiently You can save for your future Tax Efficiently Arachas Financial Services Team : we can provide solutions to look after your financial wellbeing tax efficiently Financial Advisor : Elaine Wilson E: elaine.wilson@arachas.ie / T : 021 4297261
9, Eastgate Avenue The Courtyard Eastgate Business Park, Carmanhall Road Little Island Sandyford Business Cork Park Dublin 18 Telephone: (021) 427 0505 (01) 213 5000 Fax: (021) 427 5540 (01) 213 5001 Mobile (087) 279 6677 E Mail martin.adams@arachas.ie Arachas
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