Current Issues Impacting Solicitors Professional Liability Insurance
This month we briefly consider a number of current issues which might have an impact on a solicitor’s professional liability insurance programme.
CBL Insurance Europe
Those practices having placed their Professional Indemnity Insurance with the above will be aware by now through their Broker that rumours of financial difficulties have proved to be well-founded.
The Central Bank of Ireland issued a direction to CBL Insurance Europe dac (CBLIE) instructing it to cease writing all business with immediate effect (19 February 2018), until further notice. Under the terms of this direction, CBLIE cannot renew existing policies, which includes policies that renew automatically.
Subsequently, and following the appointment of a provisional administrator to CBLIE on 26 February 2018, the Central Bank made a successful application to the High Court on 12th March 2018 to have an administrator appointed. The Central Bank took this action to protect CBLIE policyholders.
Existing policies continue to remain in force. However, the Central Bank is recommending that policyholders contact the firm directly, or their broker (if the policy was bought through a broker) to arrange alternative cover as soon as possible.
This may be of particular interest to those firms whose Professional Indemnity Insurance (PII) might be due for renewal in October or are considering an 18 month cover option; the British Insurance Brokers’ Association (BIBA) have published a guidance note to members ahead of the EU Council of Ministers meeting in Brussels in late March. Specific issues could be faced by those firms acting for clients in the EU but impacting more firms, could be the potential problems faced by their Insurers if that Insurer is using incoming passported capacity.
In view of the potential problems faced if no agreement is reached, firms need to ask the question of their Insurers as to how they will be addressing contract continuity beyond 29 March 2019.
It is clear that the well publicised ‘Cyber’ related issues hitting law firms coupled with the impending GDPR mean that cyber and data risks are adding to the liabilities faced by directors and officers (and by definition partners, members), with data controllers the latest to find themselves in the firing line. For example, the new regulations to come into effect in May will require data controllers to demonstrate appropriate compliance measures are in place, hence the liabilities will ultimately fall upon the firm’s directors/partners/members.
Legal professionals will be well aware of their peers preparing for the new legislation, coupled with the Cyber Security threats, in terms of the likely bringing of actions against those who fail to comply. There is some market thought that class actions might duly follow.
Employment Practices Liability (EPL)
Following the well-publicised harassment cases starting with the film industry, something of a movement has gathered pace which, if following to logical conclusions, would suggest that this will lead to an increase in cases brought alleging harassment in the workplace.
EPL cover is usually available as an extension to Management Liability policies. Firms should look to review the cover in place and check that this is adequate, taking account of the fact that both the perpetrator and the company can be held liable in these scenarios.
In summary, please contact the team as below should you wish to discuss or receive further detail on any of the above subjects.