Professional Indemnity Insurance

Hennybug

If the rumours are to be believed the Professional Indemnity is due to go up to @ €15k this year for sole practicioners :eek:

Is there any alternative might be acceptable to the Law Society?

enry

Hennybug wrote: »

If the rumours are to be believed the Professional Indemnity is due to go up to @ €15k this year for sole practicioners :eek:

Is there any alternative might be acceptable to the Law Society?

I know a solicitor that purchased his professional indemnity insurance for around €3,000 from an English company and he's practicing so I presume the law society is ok with it.

Sorry can’t be anymore help then that. I presume Thomas Byrne and co are to thank for the high cost of premiums.

nuac

Any insurer offering cover acceptable to the Law Society for €3,000 would scoop all the business in the state if (s)he advertises the service.

enry

nuac wrote: »

Any insurer offering cover acceptable to the Law Society for €3,000 would scoop all the business in the state if (s)he advertises the service.

At present I think the average is around €8,000. However another guy I know is paying around €12,000.

I can only say what I’ve been told but for the Kind of money being asked for its worth shopping around and I cant see how there would be a problem contacting a provider in England and seeing if they would be will to provide cover (as long as its cheaper) and checking with the law society to see if it the cover provided would be in line with their requirements.

Free movements of sh1t within the EU and all that, cant see how there would be a problem sourcing your insurance in the UK. Especially considering the fact that the insurance industry within the EU is regulated pretty much under the same guidelines. i.e. certified insurance practitioners exams are similar across the board.

Jo King

I know of one insurance company which operates here and in the UK, which will not give cover unless there are at least four partners in the firm. The majority of the claims are generated by the smaller practices.

impr0v

No doubt that's true. But for sheer scale: http://www.irishtimes.com/newspaper/finance/2009/0728/1224251491943.html

nuac

PI insurers do load smaller practices. I haven't seen the stats on which this is based.

IMHO claims can come in from any size practice. I am aware of cases where some eminent Dublin firms have been involved for different parties in transactions. In at least one case different members of the firm showed up at a meeting representing different and potentially conflicting interests. Starting explaining to me about Chinese walls etc. Told them I was dealing with all sorts of walls, Chinese or otherwise while some of them were still at school.

A claim from any such transaction would be large. Smaller practices are rarely involved in such large deals.

maidhc

nuac wrote: »

Told them I was dealing with all sorts of walls, Chinese or otherwise while some of them were still at school.

:D

Jo King

Apparentrly abhout 60% of claims relate to missing statute of limitations deadlines. Bigger firms tend to have processes in place to catch potential slip ups. Smaller operators can get muddled. Bigger firms tend to be careful and cover themselves. Some one person operators do not have a secretary, e-mail or fax and might have an old law book hanging around somewhere.

dats_right

Jo King wrote: »

Apparentrly abhout 60% of claims relate to missing statute of limitations deadlines. .

Not so, according to the the largest PI insurer the SMDF which represents 3,761 solicitors, the largest amount of claims arose not surprisingly from conveyancing. In 2006 40.88%, 2007 39.51% and 2008 42.61% of claims arose from residential conveyancing; whereas commercial conveyancing accounted for an additional 8.76% in 2006, 12.90% in 2007 and 15.30% in 2008. Meaning that on average well over half of all claims arise from conveyancing.

Interestingly, there were no PI plaintiff insurance claims brought in 06 or 07 and they only accounted for 3.28% of all claims in 2008. Clearly the Statute of Limitations is not as big a factor as one might have thought. Especially as there was no spike in claims in the initial period post Civil Liability and Courts Act 2004 modifications to the Statute, when one might have thought the new periods might have caught someone out.

nuac

Jo King - do not agree with your picture of technologically challenged single practitioner -I know and deal with many.

Most smaller offices have invested in appropriate technology. About 15 years the Law Society technology committee organised group purchases of faxes and entry level PCs and printers. I know that many smaller offices availed of those offers, and that that trend continues

Back to the thread topic - I think we should in the run up to PI renewal time compare notes and prices re cover available. The market seems to be dominated by SMDF and AON. A broker contacted me last year on behalf of Quinn Direct, but I was somewhat concerned as to how QD would deal with a claim and didn't ask for a quote.

I recall back about 2002 quotations went up. I asked why and was told that it had to do with the Twin Towers disaster the year before. I asked how that unfortunate disaster affected claims exposure to legal services in the West of Ireland. Got no answer but quotation was reduced.

Hennybug

Back to the thread topic - I think we should in the run up to PI renewal time compare notes and prices re cover available.

Sounds like a plan!

The market seems to be dominated by SMDF and AON. A broker contacted me last year on behalf of Quinn Direct, but I was somewhat concerned as to how QD would deal with a claim and didn't ask for a quote.

Will let you know

jmandj

I got pi insurance from QD last year, not alone were they cheapest but they also allowed me to pay in instalments which was a great bonus. However, I hear that the premiums are going to increase threefold this year-not just QDI but all across the board-which is of course an enormous worry particulary as it is rumoured that they will not allow payment by instalments. The Law Society are of course doing nothing as usual...."monitoring the situation" I think they said. As sole practitioners we are really trapped: have to get PI insurance, can't evade this responsibility by closing down because run off cover has to be purchased; unlikely to get a job in a solicitors office as too many solicitors chasing too few jobs-so much for the Law Society's monitoring of THAT situation, can't get Jobseekers allowance as self employed. Very disillusioned and stressed by the situation.

Victor

Hennybug wrote: »

Is there any alternative might be acceptable to the Law Society?

Retirement. :pac:

dats_right wrote: »

Not so, according to the the largest PI insurer the SMDF which represents 3,761 solicitors, the largest amount of claims arose not surprisingly from conveyancing. In 2006 40.88%, 2007 39.51% and 2008 42.61% of claims arose from residential conveyancing; whereas commercial conveyancing accounted for an additional 8.76% in 2006, 12.90% in 2007 and 15.30% in 2008. Meaning that on average well over half of all claims arise from conveyancing.

Interestingly, there were no PI plaintiff insurance claims brought in 06 or 07 and they only accounted for 3.28% of all claims in 2008. Clearly the Statute of Limitations is not as big a factor as one might have thought. Especially as there was no spike in claims in the initial period post Civil Liability and Courts Act 2004 modifications to the Statute, when one might have thought the new periods might have caught someone out.

That is number of claims, but what of the value of claims?

TheDemiurge

PMSL if I wasn't crying so much.

There's one factor here that my broker told me about - the provisions of S.I. 617/2007. This was a new regulation pursuant to the which the Law Society will only allows insurers to go onto its panel. Basically, it's not worth an insurance company's time offering cover to solicitors any more. The cover can't be cancelled like a motor policy or home policy.

This is the real reason so many insurers left the market, along with the claims experience in the UK - Lynn and Byrne actually are the red herrings in this debate.

The LS can go and take a run and jump with respect to run off cover. If you're going out of business because you can't afford insurance and the bank has pulled your overdraft facility, how on earth are you supposed to pay run off cover for seven years, the first year's premium of which is twice your current cover??!! What are they gonna do - try to bankrupt you to take your house? The sh1t is gonna really hit the fan in November. I wish Spike Milligan were still alive to see this. Is it any wonder that the public disrespect us with this hen's brains logic.

maidhc

Does anyone have any views on the new regulations the law society have published?

I haven't seen them myself, but I understand the min is dropped to 1.5m and the insurers can refuse cover on the basis of fraud.

dats_right

Victor wrote: »

Retirement. :pac:
That is number of claims, but what of the value of claims?

The percentages speak for themselves really; last year 60% of claims made to the SMDF came from residential/commercial conveyancing compared with a mere 3.28% for PI plaintiff claims. Furthermore, undoubtedly in general terms the implications of a solicitor messing up a conveyance will cost Professional Indemnity insurers multiples of the cost of missing the statute of limitations in a PI case- fact!

Indeed, in the Law Society's own briefing to members it said: "A combination of the [insurance] industry's losses in investment markets and a very substantial increase in the number and size of negligence claims relating to property transactions, including failures to comply with undertakings, following the collapse of the overvalued property market, has produced unsustainable losses for all insurers in the Irish market"

dazza21ie

The SMDF have sent out a letter to all its members to explain the current position. They start off by stating that they do not know if they will even be in a position to provide insurance this year! It will be a couple of weeks yet before they know for sure if they are able to take renewals. That in itself is quite scary.

I am sure with the market share the SMDF have they will be able to get an underwriter but at what cost? PI insurance in our office last year was €12,000. That was a struggle. Double that would be a real struggle and treble would mean the Christmas party would be at the Dole office this year.

The SMDF do warn in their letter that if they do manage to offer insurance for the year ahead it will be at a substantially higher cost than last year. And those with a claims history will just be refused cover.

Interesting times ahead for us all.

TheDemiurge

It's ironic that this is the thread that everyone doing FE-1s etc. should be reading, but aren't. If the SMDF aren't providing cover this year then the legal profession is facing immediate meltdown.

Robbo

TheDemiurge wrote: »

It's ironic that this is the thread that everyone doing FE-1s etc. should be reading, but aren't. If the SMDF aren't providing cover this year then the legal profession is facing immediate meltdown.

I'm sitting FE1s and spent the evening talking to some of the (still!) busiest heads in my town. To mitigate and paraphrase, most hope is lost.

servicecharge

What I particularly liked about the SMDF annual report was how they failed to mention in the introduction how there was a large jump is salaries and office expenses.

Let me guess tho: the chairman and board got large bonuses for losing millions on the stock market?

mamapeist

I am in the same situation. After over 35 years in practice I can no longer afford to either keep going or close down. I wont be able to draw the old age pension for a few years yet and in the meantime will have no income. What little savings I have I will need to keep me. The problem with the LS is that the council is dominated by larger firms who have no concept of the reality. There is a solicitor in Mayo called James Cahill who is on the council and very interested in this issue. I suggest we ask him to lobby to have the 6 years run off requirement changed. They only increased it from 2 to 6 years a few years ago

nuac

Yes, I know James Cahill, and have recently drawn this thread to his attention.

He has been lobbying strongly within the Council and at Bar Association level on this issue and other issues affecting smaller practices. In fact over recent years he obtained quotations from the various insurers and circulated replies to any colleagues interested.

I believe he would be interested in hearing of particular difficulties. I know that he is abroad until next week, but his email is info@jamescahill.com

TheDemiurge

Well I've made a decision that I'm not paying run off cover - I don't have the money, I have nothing, I've lost everything. I'm trying to get someone to take over my practice but to no avail as no one I've spoken to knows if they'll be around in December either. I sure as hell am not having the Law Society which I've directly funded for years attempt to take my house because I can't pay run off cover.

Do people doing the FE1s now not realise what they're getting into?? It makes far more logical sense NOT to be qualified, than to be qualified. The situation is an absolute outright disgrace and we should not accept it for a moment longer.

The Law Society MUST make arrangements for people who can't afford to keep going or close down under the current regulations. Larger practices must be forced to take over the files of practices such as ours.

If I see any inkling whatsoever of the book being thrown at me from Blackhall on this issue, I'm dumping that f**king parchment once and for all whatever way I can.

dazza21ie

I hope the competition authority are now happy. They have played a part in what will result in the closure of many small legal practices around the country and probably in a few years time it there will only be a few large practices serving large areas around the country who are free to charge what they want because there will be no competition. Quite ironic really.

TheDemiurge

mamapeist wrote: »

I am in the same situation. After over 35 years in practice I can no longer afford to either keep going or close down. I wont be able to draw the old age pension for a few years yet and in the meantime will have no income. What little savings I have I will need to keep me. The problem with the LS is that the council is dominated by larger firms who have no concept of the reality. There is a solicitor in Mayo called James Cahill who is on the council and very interested in this issue. I suggest we ask him to lobby to have the 6 years run off requirement changed. They only increased it from 2 to 6 years a few years ago

I feel so sorry for you, I really do. At the risk of sounding patronising you actually moved me to tears this afternoon

Johnny Utah

TheDemiurge wrote: »

It's ironic that this is the thread that everyone doing FE-1s etc. should be reading, but aren't. If the SMDF aren't providing cover this year then the legal profession is facing immediate meltdown.

I've been following it with great interest.

dazza21ie wrote: »

I hope the competition authority are now happy. They have played a part in what will result in the closure of many small legal practices around the country and probably in a few years time it there will only be a few large practices serving large areas around the country who are free to charge what they want because there will be no competition. Quite ironic really.

Exactly, I also said this a few weeks ago in another thread. The legal profession isn't going to disappear completely, so the remaining firms will be free to name their price when they are in demand.

dazza21ie

Johnny Utah wrote: »

Exactly, I also said this a few weeks ago in another thread. The legal profession isn't going to disappear completely, so the remaining firms will be free to name their price when they are in demand.

Not only will they be able to name their price they will also be able to effectively regulate numbers and control who comes into the profession.

Unless things change drastically in the next few years its hard to see the traditional one or two solicitor office surviving.

mamapeist

Sorry TheDemiUrge. I didn't mean to make you cry. Don't worry. I have a husband who won't let me starve, though it will be a huge culture shock for both him and me as I have never been a kept woman. He also doesn't understand when I talk about things like professional indemnity insurance - his eyes glaze over and I know he is thinking of his next golf outing.

What is expecially galling for me is that I ran a tight ship all these years and had a very good relationship with my clients, many of whom I consider friends. I now find myself telling younger clients that I acted for their grandfathers. I have never had a complaint against me to the Law Society.

I had one small claim (relating to a site map) made on my insurance which was very badly handled by SMDF. As it was conveyancing based I nominated the only Solicitor on their panel who I knew to be a conveyancer, thinking she would understand it better. She eventually rang me to say that she intended to offer the client €15,000. I was so annoyed about this I went to see her and found that, even though I had prepared a very comprehensive report on it, she had not understood the nub of it - that the client had had the map checked by his own engineer and had written to me saying he was happy with it. Only then did she write to the client denying liabilbity (up to that all she had done was to write to him saying they were investigating the matter which only gave him encouragement) and the claim was dropped. In spite of that her fees to the fund were €8000 and I had to pay the VAT. Is it any wonder the fund is in trouble.

All of the SMDF panel are either present or former LS Council members or directors of SMDF so it is a nice little earner for them.

dazza21ie

I'm sure if the SMDF canvassed solicitors around the country they would be able to make up a panel of solicitors who would defend their colleagues either on a no fee or nominal fee basis. My thinking on it would be that if i defend a colleague and do not charge a fee and this is done across the board then the cost of all of our PI insurance comes down.

Hennybug

dazza21ie wrote: »

I'm sure if the SMDF canvassed solicitors around the country they would be able to make up a panel of solicitors who would defend their colleagues either on a no fee or nominal fee basis. My thinking on it would be that if i defend a colleague and do not charge a fee and this is done across the board then the cost of all of our PI insurance comes down.

I'd certainly sign up to this and i'm sure most of my colleagues who are panicing about the up coming insurance hikes would do likewise

dazza21ie

I have read some of the Law Society summaries on the new PI Regulations and a few things are jumping out at me.

It is stated that the cost of run-off cover is already set in your current PI policy and that run-off cover will be substantially more expensive when policies are renewed. The Law Society don't say it or mark it with bold letters but i take their slant to say "if your gonna get out then go now!!.

There is also reference to the Assigned Risks Pool which I understand is where a person can obtain PI insurance if no one else will touch them. It is supposed to be PI insurance of the last resort (i think they have a similar system for car insurance). From 2010 a levy of 2% will be put on all policies as a contribution towards the Assigned Risks Pool. Does that mean that those who have been careful not to have claims against them will have to subsidise those who have become uninsurable?!

Jo King

dazza21ie wrote: »

Does that mean that those who have been careful not to have claims against them will have to subsidise those who have become uninsurable?!

Sure does. Same as your motor insurance premium subsidises those who cause accidents while driving without cover.

dee75

I've been reading this thread with interest - it's a couple of weeks since anyone posted though.

Has anyone received quotations back from insurers yet? Are they as high as anticipated?

Reloc8

I'm curious on that as well. It gives me zero pleasure to relate (and this is highly anecdotal) but I heard a real doomsday scenario of €22k being touted.

dazza21ie

From what i have heard if you get a quote under 20k you will be doing very well. Seems to be a lot of brokers contacting the office recently with proposal forms which is encouraging. The problem is filling them in! The only question they don't ask is what you have for breakfast. Alot of time will have to be dedicated to filling these forms in.

I know our office were not in the habbit of shopping around for quotes. It was just a matter of waiting for the SMDF renewal form to come in and send it back with a cheque. No sign of any renewal form from the SMDF yet!!

Ab roller plus

I've recently qualified and think the insurance situation is a joke, even at 8k never mind 22k. I stumped up a lot of money to get qualified and put a lot of time and effort into studying and now this hits the fan.

Somewhere in the region of 600 qualified between January and August this year and none have practicing certificates. :eek:

Since starting college i've watched the profession go from bad to worse. In first year I remember reading the competition authority's report on the legal profession. The recommedations made sense to me but still they have not been implemented fully. The issue re fees is still around. Not to mention the sheer volume of people entering the profession over the last few years. Self regualtion is another problem. Then Lynne and Byrne. Now insurance and run off cover when will it stop. I reckon the whole profession will crumble soon enough.

In my view, barristers and solicitors should be allowed form partnerships or the distinction between barristers and solicitors should be abolished. Licenced conveyancers should be allowed enter the market (if one still exists) and the profession should regulated by an independent body. Solicitors should not handle client monies and run of cover should be reduced to one year minimum if no claims were made in last few years and 2 or 3 years otherwise, only 6 years in serious cases. The minimum amount of cover should be reduced to 1 million for sole practitioners, free practicing certificate for newly qualifieds, automatic strike off for breach of certains undertaking if this is not already the case or even abolish the whole idea of undertakings. Let the banks use their own solicitors. Solicitors in house and working for government should have to pay for practicing certificates as well.

One idea which I really like is that solicitors should have the option of getting a District Court Practicing Certificate only without the need for insurance. I know one or two trainees who do all the District court work for their firms!!

For sole practitioners and smaller firms who are in danger of closing down they should really consider going into partnership with newly qualified solicitors. There are a lot of NQ's and solicitors with 1-5 PQE out there with capital to invest, a bit of a client base and good work ethic. This might help smaller firms develop and help reduce insurance premiums and costs in general. If sole practitioners are a thing of the past then solicitors need to adapt to this change in the market, simple as, don't expect the Law Society to change it it for us.

As a matter of interest I was quoted €1,400.00 for four months insurance up to November 1st. Not too bad I suppose.

Haywood

i have been told by a broker that he has quotes of approx 12 k for two partner firms with 25% conveyancing
SMDF are doing up a new form this week and are sending same out but have not secured full insurance yet!

maidhc

dee75 wrote: »

I've been reading this thread with interest - it's a couple of weeks since anyone posted though.

Has anyone received quotations back from insurers yet? Are they as high as anticipated?

I'm hearing 10-15k for 2 solicitor firms. Not doomsday, but still a lot of money for "nothing".

McCrack

25K for sole practitioners. What stings even more is that the companies dont make any distinction for practitioners who do very little or no conveyancing work.

The Regs are going to have to change. I think solicitors should have the option of having PI insurance. If they choose not to their letterhead should state this and the client told at the outset (in S68) and ultimately any claims comes down on their own personal head.

maidhc

McCrack wrote: »

The Regs are going to have to change. I think solicitors should have the option of having PI insurance. If they choose not to their letterhead should state this and the client told at the outset (in S68) and ultimately any claims comes down on their own personal head.

WHO would want to be a solicitor in those circumstances....

dazedandconfuse

I am a sole practitioner and like you all I am very worried about the quote for 2010. Sorry to sound like a conspiracy theroist but I believe that there is another agenda. Big firms do not like the fact that so many sole practitioners have set up in the last number of years. The Law Society don't like it much either. If the premium is €20 k minimum as expected this will close down a large numebr of sole practitioners, who will decide to go now, before the end of November, to avoid higher premiums and run off cover. This will suit the larger firms ( who can afford the cover) and the Law Soc down to the ground. Those of us who do not close down will be working for nothing.

I have been a sole practitioner for almost five years. I have never had a complaint made to the Law Society about me, never mind a claim made against my insurance. I beleive I represent the vast number of sole practitioners out there. We work hard in the best interests of our clients. We will never make a fortune but deserve to earn enough to support ourselves. From where I am standing at the moment, it is not a viable proposition any longer.

I dont see how the Law Society can sort it out while wearing two hats ( regulatory and representative). Solicitors need their own representative body, distinct from the Law Society and we need it now.


Sole practitioners are a vauable asset to the profession and should be protected where no wrong has been done. It seems we are all being punished for the greed of a few.....

Wantobe

maidhc wrote: »

WHO would want to be a solicitor in those circumstances....

+1

In any case if you did not have PI insurance I would imagine that would rule you out acting for anyone who needed a bank loan ( where a charge was required) to purchase property as the banks wouldn't allow you to act on their behalf. That's a large section of most practices.

dats_right

maidhc wrote: »

WHO would want to be a solicitor in those circumstances....

Absolutely, I mean how could you sleep at night knowing that a small mistake could potentially bankrupt you and leave you possibly homeless, so I don't think optional insurance is a runner to be honest. Nor for that matter, do i think is not holding client's monies, afterall that is so fundamental to what we do and are about. These along with most of the "suggestions" I have heard so far are all knee-jerk reactions and won't benefit the profession in the long run.

As solicitors, if PIAB has shown us anything it is not to believe a word that Insurance Companies say, they tell even more porkies than banks!! As I understand it the reasons why insurance premium are rising so dramatically are primarily two fold; firstly, of course there is the issue of increasing amount of claims against certain solicitors who took short cuts in conveyancing matters in the boom times; secondly, and not to be underestimated as a very real contributory factor, is the fall in value of insurance company asssets and investments. Isn't it funny that in any type of policy be it public liability, motor or PII that insurance companies always blame the high cost of claims as the only reason for increasing premiums whilst coincidentally in recessionary times and whilst the value of their assets have simultaneously fallen off a cliff this fact is never mentioned or stated as a serious contibutory cause or factor.

Make no mistake, these are unquestionably worrying times for solicitors, but one must also remember that this is how the SMDF came into existence in the first place back in the late 1980's, when then as now, solictors were being held to ransom by insurance companies. Apparently, the SMDF's own investments have been wiped-out which hasn't helped the situation; and it may well be that the old reliable may well not be in a position to offer insurance or may even fail altogether. But if that happens, obviously emergency steps will have to be taken and perhaps a better, more equitable system may emerge from the ashes. It wouldn't be the first time that I have heard a colleague say in recent times that it would be better if the SMDF failed, resulting in having had to go back to the drawing board.

I stated at the outset that most of the proposals that I have heard mooted to ameliorate the situation have been either knee-jerk or total lunacy. I certainly don't have all the answers, but three things which really should be changed are:

1. Firms/ practitioners with poor claims history should be penalised for such. For example if I crashed my car 5 times in a three year period I would find it very difficult to a) get insured, and b) even if I got insurance cover the cost would be astronomical. Unfortunately, we have been let down by a small proportion of our colleagues who continously failed to observe good standards of practice and claims were made against them. Whilst any one of can make a mistake, it is a sad reality that the majority of claims arise against the same firms/ practitioners over and over again. This cannot continue there is no way that the good firms and practitioners can continue to pick up the tab for the wayward few.

In essence those with a poor claims record should pay the economic cost of their insurance based on their risk/claims profile. If this means that a small number of negligent practitioners have to pay €100k to get cover so be it, at least this way it will weed out the habitually substandard and incompetent. As I say we can all make a mistake and I am not suggesting that a solicitor that has one claim against him should be hammered, but at the moment, there is a ridiculous sitaution whereby a firm/ practitioner with maybe 30-40 years claims free history is being essentially treated the same as a solicitor with 2 claims in the last 5 years and thus being penalised for the incompetence and mis-deeds of a few.

2. Following on from no.1 at present our insurance is on a claims made basis i.e. If a negligent act happened in 2007 and a solicitor is only sued in 2009, it is his 2009 policy that is claimed against and not his 2007 policy (even if now with different insurer); whereas if I crashed my car and caused somebody personal injuries in 2007, and even though the claim may not be notified until 2009, my motor policy for 2007 would cover the claim.

Part of the reason why insurance is going up so dramatically is that at the moment insurers don't know how many potential claims are out there, particularly those arising during the property boom period of 2004-2007 and with rising default on mortgages banks are going to seeking to realise their securities on properties and the fear factor is that there is a ticking time bomb in relation to same.

If however, insurance was changed to a period type insurance rather than claims made basis, at least insurers could say look at the present situation and say at least we're only covering liability for a period certain going forward rather than unknown potential liabilities in the past. This method would also allow the many solicitor who want to retire or cease practising to do so without having to get very expensive run-off cover, as their policy would cover their period in practice.

3. The insurance companies managed to have a two year statute of limitations period introduced in personal injuries matters, why can't we lobby to have the statute of limitations reduced to say 3 years? This step would dramatically reduce the amount of potential claims out there that can come back and bite us. At present it is six years and is far too long. If this means banks have to investigate titles themselves again rather than relying on Undertakings & Certificates of Title well then so be it. In fact scrapping the Cert of Title system altogether would definitely bring down premiums, as whether we ackowledge it or not there can be (and often is) a conflict of interest between a purchaser/borrowers interests and those of the lending institution and most claims are now arising on foot of defective Certs of Title and/or Undertakings.

Ab roller plus

dats_right wrote: »

3. The insurance companies managed to have a two year statute of limitations period introduced in personal injuries matters, why can't we lobby to have the statute of limitations reduced to say 3 years? This step would dramatically reduce the amount of potential claims out there that can come back and bite us. At present it is six years and is far too long. If this means banks have to investigate titles themselves again rather than relying on Undertakings & Certificates of Title well then so be it. In fact scrapping the Cert of Title system altogether would definitely bring down premiums, as whether we ackowledge it or not there can be (and often is) a conflict of interest between a purchaser/borrowers interests and those of the lending institution and most claims are now arising on foot of defective Certs of Title and/or Undertakings.

I suggested the end to the idea of undertakings as well. Add this to a change to the statute of limitations and we should see a reduction in premiums.

Some of the blame has to land at the door of the underwriters - surely they are not assessing the risk fairly if a claims free firms firm is paying a huge premium. What about the lack of competition in the market? Would more competition not mean reduction in premiums?

Wantobe

dats_right wrote: »

Absolutely, I mean how could you sleep at night knowing that a small mistake could potentially bankrupt you and leave you possibly homeless, so I don't think optional insurance is a runner to be honest. Nor for that matter, do i think is not holding client's monies, afterall that is so fundamental to what we do and are about. These along with most of the "suggestions" I have heard so far are all knee-jerk reactions and won't benefit the profession in the long run.

As solicitors, if PIAB has shown us anything it is not to believe a word that Insurance Companies say, they tell even more porkies than banks!! As I understand it the reasons why insurance premium are rising so dramatically are primarily two fold; firstly, of course there is the issue of increasing amount of claims against certain solicitors who took short cuts in conveyancing matters in the boom times; secondly, and not to be underestimated as a very real contributory factor, is the fall in value of insurance company asssets and investments. Isn't it funny that in any type of policy be it public liability, motor or PII that insurance companies always blame the high cost of claims as the only reason for increasing premiums whilst coincidentally in recessionary times and whilst the value of their assets have simultaneously fallen off a cliff this fact is never mentioned or stated as a serious contibutory cause or factor.

Make no mistake, these are unquestionably worrying times for solicitors, but one must also remember that this is how the SMDF came into existence in the first place back in the late 1980's, when then as now, solictors were being held to ransom by insurance companies. Apparently, the SMDF's own investments have been wiped-out which hasn't helped the situation; and it may well be that the old reliable may well not be in a position to offer insurance or may even fail altogether. But if that happens, obviously emergency steps will have to be taken and perhaps a better, more equitable system may emerge from the ashes. It wouldn't be the first time that I have heard a colleague say in recent times that it would be better if the SMDF failed, resulting in having had to go back to the drawing board.

I stated at the outset that most of the proposals that I have heard mooted to ameliorate the situation have been either knee-jerk or total lunacy. I certainly don't have all the answers, but three things which really should be changed are:

1. Firms/ practitioners with poor claims history should be penalised for such. For example if I crashed my car 5 times in a three year period I would find it very difficult to a) get insured, and b) even if I got insurance cover the cost would be astronomical. Unfortunately, we have been let down by a small proportion of our colleagues who continously failed to observe good standards of practice and claims were made against them. Whilst any one of can make a mistake, it is a sad reality that the majority of claims arise against the same firms/ practitioners over and over again. This cannot continue there is no way that the good firms and practitioners can continue to pick up the tab for the wayward few.

In essence those with a poor claims record should pay the economic cost of their insurance based on their risk/claims profile. If this means that a small number of negligent practitioners have to pay €100k to get cover so be it, at least this way it will weed out the habitually substandard and incompetent. As I say we can all make a mistake and I am not suggesting that a solicitor that has one claim against him should be hammered, but at the moment, there is a ridiculous sitaution whereby a firm/ practitioner with maybe 30-40 years claims free history is being essentially treated the same as a solicitor with 2 claims in the last 5 years and thus being penalised for the incompetence and mis-deeds of a few.

2. Following on from no.1 at present our insurance is on a claims made basis i.e. If a negligent act happened in 2007 and a solicitor is only sued in 2009, it is his 2009 policy that is claimed against and not his 2007 policy (even if now with different insurer); whereas if I crashed my car and caused somebody personal injuries in 2007, and even though the claim may not be notified until 2009, my motor policy for 2007 would cover the claim.

Part of the reason why insurance is going up so dramatically is that at the moment insurers don't know how many potential claims are out there, particularly those arising during the property boom period of 2004-2007 and with rising default on mortgages banks are going to seeking to realise their securities on properties and the fear factor is that there is a ticking time bomb in relation to same.

If however, insurance was changed to a period type insurance rather than claims made basis, at least insurers could say look at the present situation and say at least we're only covering liability for a period certain going forward rather than unknown potential liabilities in the past. This method would also allow the many solicitor who want to retire or cease practising to do so without having to get very expensive run-off cover, as their policy would cover their period in practice.

3. The insurance companies managed to have a two year statute of limitations period introduced in personal injuries matters, why can't we lobby to have the statute of limitations reduced to say 3 years? This step would dramatically reduce the amount of potential claims out there that can come back and bite us. At present it is six years and is far too long. If this means banks have to investigate titles themselves again rather than relying on Undertakings & Certificates of Title well then so be it. In fact scrapping the Cert of Title system altogether would definitely bring down premiums, as whether we ackowledge it or not there can be (and often is) a conflict of interest between a purchaser/borrowers interests and those of the lending institution and most claims are now arising on foot of defective Certs of Title and/or Undertakings.

Excellent post dats right. From your lips to the Law Societys ears.

Even where a solicitor takes out 6 years run off cover, they could still be potentially sued after that date where negligence was not discovered until after the 6 years. A ridiculous situation which would mean a solicitor who paid very expensive insurance premiums would be left without cover.

Jo King

Wantobe wrote: »

Excellent post dats right. From your lips to the Law Societys ears.

Even where a solicitor takes out 6 years run off cover, they could still be potentially sued after that date where negligence was not discovered until after the 6 years. A ridiculous situation which would mean a solicitor who paid very expensive insurance premiums would be left without cover.

I hope you are not a solicitor. Unless it is a personal injury discoverability has no application with regard to the time limits specified in the Statute of Limitations.

Ab roller plus

Jo King wrote: »

I hope you are not a solicitor. Unless it is a personal injury discoverability has no application with regard to the time limits specified in the Statute of Limitations.

I think the previous posters name might allay your fears!;)

Wantobe

Jo King wrote: »

I hope you are not a solicitor. Unless it is a personal injury discoverability has no application with regard to the time limits specified in the Statute of Limitations.

I am a solicitor and I the reason I said that is that I recently received a counsels opinion to this effect. If they are wrong...

McCrack

I've raised the suggestion that PI Insurance should be made optional and it's been refuted but I'll put it this way...

Being a sole practitioner (I use this type of example as these are the type of solrs. that are going to suffer the most in the next few weeks) is a business and like any it has its risks.

Sole traders don’t have the protection of limited liability and yet these people often take out business heavy loans which ultimately they are personally accountable for. Apply this to sole practitioners who choose not to have PI insurance. They run a risk but equally they are very aware that any move wrong could potentially have serious personal financial consequences. The incentive is thus there to do the job absolutely right.

Also if a practitioner does little or no conveyancing work the risk of being financially cleaned out is minimal unless he she is a gobs*ite or willfully commits fraud.

The SDMF is going to the wall (and good riddance to it) but it leaves only a handful of insurers out there and the consequent cost.

Practitioners need to get together (as is happening) and go head to head with the LSI to work around this. It's not sustainable at present.

Also it's well within the LSI power to change the S.I's re PI Insurance but they are just dragging their feet on this. its as if they want as many of the little guys to fold.

It's the little guys that give a professional and personal service to the communities they work in and like the local pub or corner shop...if these services go it's the people who ultimately suffer and lose out.

Jo King

Wantobe wrote: »

I am a solicitor and I the reason I said that is that I recently received a counsels opinion to this effect. If they are wrong...

See the case of Hegartyv O Loughran [1990] 1 IR 148.
The only way around the six year limit for the Plaintiff is to plead fraud or concealment, which I am sure no solicitor would do!