Insurance Levy Set for 2013/14 Policy Year
By Anne Kirker, QC, Bencher and Chair, Insurance Committee and Lisa Sabo,
Director, Alberta Lawyers Insurance Association
The Benchers have approved the Alberta Lawyers Insurance Association (ALIA) Insurance Levy for insured lawyers in the amount of $3,550 plus GST for the 2013/2014 policy year.
Frequently Asked Questions
How did the amount of the insurance levy change in comparison to last year?
The 2012/13 insurance levy payment was $3,300 plus GST. The 2013/14 insurance levy is an increase of $250 (or 7.5%) over the previous year.
What are the factors that determine the insurance levy?
The insurance levy is determined by an actuarial assessment based on historical claims, the current claims environment, projected future claims and anticipated investment performance of the reserve fund. The insurance levy reserve fund must be maintained at a level recommended by the actuary's assessment.
What led to the increase of the 2013/2014 levy?
In 2012, the Alberta Lawyers Insurance Association (ALIA) continued to feel the adverse effects of the 2008 economic crisis. An above-average number of claims were received while the organization strived to fulfill its goal of becoming a model insurance program in alignment with the Law Society of Alberta’s vision of becoming a model regulator.
ALIA has continued to see increased claims in the real estate area, where the claims volume doubled between 2008 and 2010. While those numbers have started to come back down, the reduction in real estate claims was offset in 2011 and 2012 by an increased number of claims in matrimonial and family law, as well as estate planning and administration.
The insurance levy is based on an actuarial calculation. Funds received from the levy must cover claims costs for the coming year and also includes the premium paid to the Canadian Lawyers Insurance Association (CLIA) of $630 per insured lawyer. The levy is also determined by ALIA’s return on investments which was impacted by the economic downturn, resulting in less money available to subsidize the insurance levy. The combined effect of increased claims costs and loss in investment income has resulted in a modest increase in the insurance levy paid by all Alberta lawyers in private practice.
What is the outlook going forward?
As claims resulting from the economic downturn are resolved, ALIA is cautiously optimistic that the insurance levy will stabilize.
Payment Due on July 2, 2013
The levy is due July 2, 2013. Payments can be made in a single payment or by two installments. Please click here for payment details.
Please note that lawyers who have paid claims in the past five years will pay surcharges in addition to the set levy.
Exemptions From the Levy
Exempt active lawyers are insured at no charge for Pro Bono services provided through:
- Volunteer Lawyers Services program,
- Calgary Legal Guidance,
- the Edmonton Community Legal Centre,
- the Central Alberta Community Legal Clinic,
- Lethbridge Legal Guidance,
- the Children’s Legal and Education Resource Centre, or
- Grande Prairie Legal Guidance.
Purchasing Excess Coverage
The Law Society recommends that firms consider purchasing excess coverage for additional protection.
Applications are available on the Canadian Lawyers Insurance Association (CLIA) website at www.clia.ca or by contacting ALIA at 403-229-4716 (1-800-661-1694) or ALIA@lawsociety.ab.ca.
As the value of client matters and transactions increase over time, so does the need to secure adequate levels of errors and omissions insurance.
2013/2014 Excess Insurance Renewal Applications
The 2013/2014 Renewal Application for excess insurance will be distributed via email to firms. If you have not received it by Friday, May 24th, please contact ALIA at 403-229-4716 (1-800-661-1694) or ALIA@lawsociety.ab.ca.
Note on Claims Reporting:
ALIA strongly recommends practitioners take steps to prevent claims. Preventing claims remains the most effective way of controlling costs of the insurance program.
Missed limitation claims continue to be a common area of claims reported to ALIA. Errors reported in this regard include a failure to enter the limitation date in the firm’s system or entering an incorrect date. It is important for all individuals involved in a file to ensure important dates have been accurately entered into the firm’s limitation system.
The ALIA policy requires that all claims or potential claims be reported to ALIA during the policy period. Please ensure all claims or potential claims are reported to ALIA on or before June 30, 2013.
Be Aware of Fraud
Please continue to check the Law Society website and read the EBulletins and Advisories for information on fraud and how to prevent fraud. If you have been targeted by any fraud scams, please email ReportingFraud@lawsociety.ab.ca.