Covered: you may have insurance but don't talk about it
The Law Society has clarified to what extent solicitors should tell clients certain details about their professional indemnity insurance (PII).
In its new publication ‘Insurance Matters’, co-produced with broker Aon, the society said that when facing a claim or circumstances that may give rise to a claim, solicitors should not make reference to their PII.
A supplement published recently reported that ‘several firms found this strange advice’, given the fact that it is a requirement to have PII in place in order to practise and, particularly, given the EU directive which came into force on 28 December 2009 and which requires certain details of PII to be made available to clients.
The supplement explains that the advice was published before it was known when the directive would come into force. The society has recently issued a practice note on the Provision of Services Regulations 2009, which sets out the information solicitors should make available:
- The name of the firm’s PI insurer;
- The insurer’s contact details; and
- The territorial coverage of the insurance.
This information can be provided in the client-care letter, on the firm’s website or made easily accessible at the firm’s offices.
This obligation is in addition to rule 18.1 of the Solicitors Indemnity Insurance Rules, which requires solicitors to disclose certain information, upon request, of the compulsory indemnity insurance limit.
So is this actually strange advice? The supplement, written by Aon claims director Jill Gough, replies: “No PI insurer should prevent you from following the regulations and you will not have prejudiced your right to indemnity by adhering to the new rules.
“However, it is not necessary to display either the primary or total limit of indemnity that you have purchased, nor do you need to make reference to any policy excess for which you are financially responsible. If you wish to disclose particulars of your [PII], over and above the minimum disclosures required by the rules and regulations, you should first obtain your insurer’s agreement in writing.”
Ms Gough says that it remains good practice when communicating with a claimant or potential claimant, particularly when they are not a client, to refer to your insurers as little as possible. “Even when it is evident that insurance is in place, it is well known that people are far more confident in pursuing a claim against you if they know an insurer is backing you. So, simple statements such as a promise to make a payment or agree to a settlement because you have insurance – ‘it’s all covered’ – should be avoided.”
- The Law Society has revised its practices notes on client-care letters and complaints management. See here.
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