See you at conference? - Global Leader in Insurance Broking and

IN ASSOCIATION WITH
Cover lines
In this special feature, Marsh presents a safety check to help
solicitors consider how well their professional, business and
personal insurances match the various risks they face
CONTENTS
A
s with most aspects of risk
management, having the right
insurances and getting our insurances
“right” starts with being aware of
the risks we may face.
Of course, for solicitors in private practice,
Professional Indemnity insurance (PII) is
a compulsory requirement. However, the
specific cover you choose may depend on the
nature of your firm’s business and any specific
requirements of your clients. The section on PII
on page 24 addresses some of the most frequently
asked questions around adequacy of cover and
meeting the requirements of some of your
commercial clients.
Whether you operate your practice from home,
from a single office or from a number of offices,
you cannot operate without some level of Office
insurances. But is it time for a review of your cover?
The quick quiz on page 25 may help you decide.
If a key individual in your practice was to become
critically ill, would you be protected against the
impact on the firm? Business Protection is about
insuring against the unexpected.
Solicitors involved in dispute resolution
and litigation work are used to advising clients
on risk, including the costs risk of embarking
on litigation and, increasingly, insurance is
becoming a topic for discussion with clients. The
Q&A on page 26 explains how After the Event
insurance can help mitigate clients’ exposure to
costs of litigation.
It is also important that your personal
insurances meet the risks you face. House and
Contents insurance is relevant to most of us. But If
you own a higher value property, do you draw on
specialist advice and high-net-worth insurance
products to strike the correct balance between
price and protection?
As a global leader in insurance broking and
risk management, Marsh is ideally placed to help
you find a bespoke insurance solution for your
business and for your home. To find out how we
can help you, why not contact us today?
See you at conference?
As a global leader in insurance broking and risk management, Marsh is ideally placed to help you
find a bespoke insurance solution for your business and for you personally. Marsh will be
attending the Law Society of Scotland’s Law in Scotland conference on 24 September 2013,
and we would welcome the opportunity to talk to you about any of the topics featured here,
or any risk-related matters you wish to discuss.
Alternatively, why not visit www.marsh.co.uk/scotlaw, which features a wealth of
downloadable materials on risk and insurance matters.
– 1 –
For you and your practice
2 Professional Indemnity insurance:
How much is enough?
2 Fidelity Guarantee Insurance
3 Office insurances: Does
your cover measure up?
3 Business Protection insurance:
Could you face the unexpected?
For home
4 House and Contents cover:
Opt for specialist advice
For your clients
4 After the Event insurance:
Benefits for client and firm
CONTACTS AT MARSH
Russell Lang
0131 311 4259
[email protected]
Mhairi Scott-Bennett
0131 311 4111
[email protected]
James Jobling
0161 954 7350
[email protected]
Alistair Sim
0131 311 4283
[email protected]
September 2013
Journal of the Law Society of Scotland
IN ASSOCIATION WITH MARSH
PROFESSIONAL INDEMNITY INSURANCE
How much
is enough?
Is it worth taking on new business that might
require additional PII cover? Russell Lang suggests
some questions a practice should address
W
hatever their range of clients and
activities, solicitors’ practices
regulated by the Law Society
of Scotland and covered by the
Master Policy all have cover for the compulsory
level, currently £2 million for any one claim.
For some firms, that is more than adequate,
while others require substantial additional
“top-up” cover, reflecting their assessment of
the risk exposures associated with higher value
engagements or, in some cases, to comply with
specific requirements of commercial clients’
terms of appointment.
It makes good sense to review the adequacy
of the firm’s cover on a regular basis and, while
there may be no single correct answer, there
is guidance available from Marsh to assist the
decision making process. Aside from periodic
proactive review, questions regularly arise when
firms are considering the cost-benefit of taking
up new business opportunities:
• If we decide to increase our cover because of
a higher value engagement, how long would
we need to maintain the higher level of cover?
• Can we pay an additional premium to increase
our cover for a higher value engagement?
The answers to these questions can be found
on the Marsh website, but addressing the final
question, the short, and perhaps inconvenient,
answer is No. PII cover is on a “claims made” basis,
which means it may be necessary to maintain the
increased level of cover beyond completion of
the engagement, perhaps for a number of years
– incurring an annual premium for top-up cover.
If the reason for considering top-up cover
is a single higher value engagement, before
committing to the engagement it makes sense to
consider whether the remuneration justifies the
projected cost of the top-up cover for the required
number of years.
Cost-benefit assessment
If the forecast additional cost of top-up cover was
estimated to be £3,000 per annum, and was to
be maintained for up to five years, is the fee for
the work sufficient to cover the forecast
£15,000 cost of the additional cover? Or could
the additional cost be justified by reference to
other higher value transactions the practice
is undertaking?
How would you answer the
following questions?
• How should we go about deciding what level
of PII cover we ought to have?
• Does it make any difference that we always cap
our liability to clients?
• Does the fact that we operate as an LLP or
limited company make any difference?
• In the event of a claim, is it our current level
of cover that applies, or is it the level of cover
we had at the time we were doing the work?
or more FAQs answered, further guidance
F
and Marsh’s e-learning module on PII,
please visit: www.marsh.co.uk/scotlaw
Professional Indemnity insurance
Russell Lang, 0131 311 4259
[email protected]
– 2 –
Fidelity
guarantee
insurance
In a harsh economic environment,
when businesses and individuals may
be facing financial challenges, the
incidence of fraud and dishonesty tends
to increase. Experience shows that
even trusted colleagues are capable
of dishonesty if they find themselves
in circumstances where they have
both motive and opportunity.
Frauds may be committed by those one
would least suspect, including senior,
long-term and trusted colleagues
who are first time offenders.
If considering cover for financial loss (not
covered by the firm’s PII cover) resulting
from fraud, dishonesty or malicious acts,
consider whether the policy would:
yy Cover fraud, dishonesty and malicious
acts by employees and principals of
the business; and by third parties.
yy Reimburse the practice for the
(doubled) excess under the Master
Policy in the event of a claim arising
as a result of theft of client funds.
For our e-quiz on frauds and scams,
log on to www.marsh.co.uk/scotlaw
and for more information on Fidelity
Guarantee cover, contact Alistair Sim.
[email protected]
September 2013
Journal of the Law Society of Scotland
IN ASSOCIATION WITH MARSH
OFFICE INSURANCE
BUSINESS PROTECTION INSURANCE
Does your cover
measure up?
For busy lawyers, a review of your current office insurance policy
may be some way down your list of priorities. However, inertia
may mean that your existing cover is insufficient, or you miss
out on a more cost-effective solution. Take the quiz below to
see if it’s time for a review
How often do you review your policy sums
insured and terms and conditions?
a.We often make changes and talk to our
insurance broker throughout the year.
b.We review the policy at every renewal.
c. We just renew the policy on a roll-over
basis at renewal – it’s so convenient!
How many warranties and
conditions are on your policy?
a.None, policy is warranty and condition free.
b.A few, but we believe we comply with all.
c.Lots, and I think we comply
with most of them.
For firms involved in property sales, does
your policy include conveyancing cover?
a.Yes, and we can choose the limit.
b.Yes, but restricted to a set cover limit.
c.No, I didn’t know that cover was available.
If you were unable to work from your
office due to flooding or fire damage,
how would the business cope – do you
insure for business interruption cover?
a.Yes, we insure additional costs of working
because it is unlikely we will lose fee
income due to a fire/flood at the office.
b.Yes, we insure for the traditional
loss of income.
c.Maybe, I’m not sure without checking.
b.Yes, it’s an optional add-on for
an additional premium.
c.No, I didn’t know that cover was available.
If any of your office contents, computers
or laptops are stolen, how does your
policy respond to theft claims?
a.Our policy offers full theft cover
including walk-in walk-out theft.
b.Our policy only covers theft with forcible
and/or violent exit or entry to the premises.
c.Our policy only covers theft with
forcible and/or violent exit or entry
to the premises and we have to
have an alarm system in place.
Your answers
Mostly As – sounds like you may have
a good policy in place; perhaps you are
already insured through Marsh!
Mostly Bs – Looks good, but it may be worth
arranging a review of your policy to ensure
your covers match your firm’s requirements.
Mostly Cs – There may well be room
for some improvement in your current
arrangements. It could be a good time to
consult an Office insurance specialist!
or the full set of questions why not
F
visit: www.marsh.co.uk/scotlaw
With reports of cyber-crime against UK
firms on the rise, how would the firm
protect against a virus or hacking attack?
a.Our Office policy includes virus/
hacking cover as standard.
b.Our Office policy can provide virus/hacking
cover as an optional add-on for an additional
charge, or we purchase a standalone policy.
c.I didn’t know that cover was
available and we may be at risk
against potential cyber threats.
How would the practice respond if one of
the key personnel/fee earners is absent
due to injury or illness? Does your policy
include locum cover for key personnel?
a.Yes, included as standard.
Office insurances
Mhairi Scott-Bennett, 0131 311 4111
[email protected]
– 3 –
Could you face
the unexpected?
No one likes surprises, and as
the economic outlook remains
unpredictable, it’s vital that
practices make good financial
planning a priority in order to protect
themselves from the unexpected.
Has your practice considered
the impact, or likelihood, of a key
colleague dying or becoming critically
ill? The statistics can be surprising.
Likelihood of at least one partner/
director dying before age 65*
Number of partners/directors
Age
2
3
4
5
10
35
13%
19% 25% 30% 51%
40
13%
18% 24% 29% 49%
45
12%
17% 23% 27% 47%
50
11%
16%
21% 25% 44%
Likelihood of at least one partner/
director getting a critical illness before
age 65**
Number of partners/directors
Age
2
3
4
5
10
35
50% 65% 75% 82% 97%
40
49% 64% 74%
45
47% 62% 72% 80% 96%
50
44% 58% 68% 76% 94%
81% 97%
*Based on mortality data from TMN00 (temporary
assured lives, male non-smokers, 1999-2002) at
five plus years’ duration. **CIBT02. Based on 19712003 population data and experience, published
in SIAS paper “Exploring the Critical Path”, 2006.
Males, stand-alone, extended cover, including own
occupation and total and permanent disability.
But do you actually need cover?
If you answer yes to any of the
following, you may have a genuine
business protection requirement:
yy Do you have key colleagues who
are central to the prosperity
of your business?
yy Do you have a new CEO,
finance director or other
significant contributor?
yy Are you going through a
merger or acquisition?
yy Is your growth financed by
borrowing or capital?
For an initial consultation to discuss
business protection requirements,
or a suitability review of any existing
policies, please contact the Mercer
Marsh Benefits team at david.
[email protected]
September 2013
Journal of the Law Society of Scotland
IN ASSOCIATION WITH MARSH
HOUSE AND CONTENTS INSURANCE
AFTER THE EVENT INSURANCE
Benefits for
client and firm
James Jobling explains
the potential risk benefits
to clients contemplating
commercial litigation
For peace of mind opt
for specialist advice
If you own higher value property, consider
specialist advice and tailored insurance
products to strike the right balance between
price and protection
T
he rise of “price comparison” websites
has arguably created a false impression
that all home insurance policies
are basically the same, and that
getting good value equates to getting the
best price.
The reality is very different, particularly
if you own a higher value property – usually
defined as subject to a rebuild cost of more than
£500,000. Price is only part of the picture, and
getting good value means finding a balance
between price, protection and personalised
service. That is, while the cheapest standard
policy may be adequate for the average threebedroom home, it may be a false economy for
higher value homes.
In particular, the risks to your home and
contents may be more diverse, the potential
losses more significant and the process of
replacement or repair more involved – especially
if you own expensive jewellery, fine art, antique
or bespoke furniture. As a result, you will
almost certainly need the kind of tailored
protection that standard household policies
simply do not offer. You also need to be
sure that you have adequate insurance cover in
place to protect the full value of your property
and its contents.
Unfortunately, if you fail to get adequate
cover, you may not find out until you come to
make a claim, by which time it is already too late.
As a legal professional you no doubt have
a hectic schedule, often juggling work and
personal commitments – time is money. Any
down time you have is precious, so why spend
it on activities we can manage for you?
Working with a specialist broker helps
overcome the issue of under-insurance. Marsh
can help you ensure that your home and
possessions are valued correctly and insured
for the right amount, so you have peace of mind
from the outset knowing exactly what is covered
and for how much.
To arrange your tailor-made insurance
solution, Marsh works with specialist insurers
who have the flexibility to adapt to even the most
complex risk scenario.
Our private clients team has a wealth
of experience and specialist knowledge:
• Higher value homes and contents
• Luxury cars – for example, prestige,
performance and classic cars
• Fine art and collections
• Jewellery and other valuables
• Overseas properties and travel
• Bloodstock and equestrian owners
and businesses
• Yachts and boats.
or your complimentary insurance review please
F
contact Marsh’s private clients team, quoting
reference SL1: 020 7138 4660 /
www.MarshPrivateClients.com /
[email protected]
The information contained herein is based on sources we believe reliable and should be understood to be general risk
management and insurance information only. The information is not intended to be taken as advice with respect to any
individual situation and cannot be relied upon as such.
Mercer Marsh Benefits is a service provided by Mercer Ltd which is authorised and regulated by the Financial Conduct Authority.
Registered in England and Wales No. 984275. Registered Office: 1 Tower Place West, Tower Place, London, EC3R 5BU. Marsh Ltd
is authorised and regulated by the Financial Conduct Authority for insurance mediation activities only. © Copyright 2013 Marsh
Ltd All rights reserved.
– 4 –
Q: In a nutshell, what is After
the Event insurance (AtE)?
A: Generally speaking, AtE insurance
is legal expenses insurance cover
which can protect pursuers against
their opponent’s adverse costs.
Furthermore, AtE may also be extended
to cover your clients’ own outlays,
including expert and counsel’s fees.
Q: In what sorts of cases
could AtE be relevant?
A: AtE insurance is potentially
relevant in several areas of
commercial litigation, including
insolvency, professional negligence,
property disputes, construction
disputes, debt recovery, contractual
disputes and contentious trusts.
Q: Can you explain the benefits
to clients who are contemplating
pursuing litigation?
A: Litigation obviously carries risks and,
for some, the potential costs may make
litigation cost-prohibitive. AtE insurance
can enable clients to proceed with
commercial litigation more confidently
by safeguarding against the potential
costs of losing and having to pay the
other side’s costs. Also, it can improve
a client’s financial profile by enabling
them to litigate to recover bad debts.
Q: Would you say there are potential
benefits for solicitors also?
A: I believe there are, in part because
AtE provides a way of addressing
clients’ “risk v reward” concerns and
allows them to proceed with litigation.
Also, accessing and advising on
innovative insurance solutions may
provide a means of differentiating
solicitors from their competitors.
Q: Can you explain what’s involved
in arranging cover for a client?
A: I’d be delighted to. For an explanation
of what’s involved or for an idea of
premiums, please contact me today.
After the Event legal
expenses insurance
James Jobling, 0161 954 7350,
[email protected]