Proctor : April 2015
Lexon’s genesis was the collapse of HIH Winterthur and FAI Insurance in the early 2000s. This meant that professional indemnity insurance for lawyers became very difficult to obtain. To address this, QLS formed Lexon to insure your professional indemnity risks. Lexon now protects more than 1,700 practices in Queensland, ranging in size from the smallest regional practices to the largest Brisbane-based national practices. Partnering with you to reduce the number of claims To assist practitioners to manage and reduce risk, Lexon has introduced many innovations including the flagship workshop program where our team of risk professionals regularly visit insured practices to provide practical insights into both systemic and emerging issues. While we understand that professional practice can never be guaranteed error free, our active partnership with the profession continues to improve risk awareness. Our workshops, risk tools and other initiatives have coincided with a marked decrease in the yearly number of insurance files by over 43% since 2002/03. With a growing profession, this means the number of files opened per 1,000 solicitors has also decreased by over 61% in the same period – as can be seen in the graphic below. 2015/16 renewals and rates Thank you to all practices that completed their QLS Insurance Renewal Questionnaire. The online process has been very successful and provided useful insights into the current state of the profession which I will report upon in a later edition of Proctor. QLS and Lexon work hard to ensure that rates are kept as low as is prudently possible. The recent improvement in claims performance will be a factor taken into account in determining levy rates for 2015/16. These rates will be announced in early May. Regional visits Lexon’s risk team continues its successful visits to practices across Queensland. I personally had the pleasure of visiting with a number of Gold Coast practices in February. Although the region still faces some challenges, given the reliance upon tourism and property development, it is nice to hear that confidence has returned in the lead-up to the 2018 Commonwealth Games. I look forward to seeing many regional members at the QLS Intensive in Rockhampton on 23 April and at the North Queensland Law Association Conference on 29 and 30 May. I am always interested in receiving feedback, so if you have any issues or concerns, please feel free to drop me a line at firstname.lastname@example.org. Michael Young CEO Lexon is committed to ensuring the profession remains abreast of insurance developments. As a part of this commitment, we have initiated this quarterly update to help you get the most from your Queensland insurance scheme. Your professional indemnity insurer Lexon Insurance Pte Ltd ARBN 098 964 740 Incorporated in Singapore Registration No: 200104171C Since 2002/03: Yearly File Numbers Down 43.3% Yearly Files/1,000 Practitioners Down 61.5% Insurance File Trends 2002/03 – 2013/14 0 20 40 60 80 100 120 140 160 0 100 200 300 400 500 600 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 File numbers Frequency It is safe to say that we receive more feedback on the conveyancing protocol and its associated letters and checklists than on any of the other Lexon tools. While many see these protocols as a helpful guide, some believe they should be shortened and made less prescriptive. Here are answers to some common questions on why the protocol exists, how it has been developed and the various options available to practitioners. Why do we have the conveyancing protocol? Conveyancing claims are a significant contributor to the cost of the scheme. One dollar in every three of our claims portfolio is allocated to conveyancing matters. In the context of multiple files being managed at once, in a time critical environment and often by paralegal staff, there are two key failures which contribute to most of these claims: • not complying with the Court identified duty to fully advise a client; and • overlooking a legislative, searching or contract consideration. Lexon’s conveyancing protocol was designed to assist you to manage these risk issues and reduce the cost of these claims to the insurance scheme. The importance of this goal is reflected in the policy which applies a deterrent excess to a claim if the practitioner has not made a bona fide attempt to comply with the protocol. Lexon’s series of interactive letters and checklists (available on the Lexon website lexoninsurance.com.au) can be used as a way of demonstrating a bona fide attempt to comply with the protocol. Bona fide endeavours to comply can also be established if the practice had its own system which addressed the relevant elements of the protocol. Are the conveyancing letters and checklists too long? We appreciate that a profitable conveyancing practice must be efficient in addressing the various obligations and this can be challenging. Lexon’s protocol, letters and checklists have been prepared with the help of leading practitioners and are regularly reviewed to ensure they are as compact and simple as possible. Modern conveyances are complex and many things can go wrong. The protocol addresses key matters and does not create any new legal obligations, rather it simply reflects risks that need to be managed in some fashion in order to reduce the likelihood of a claim. We regularly seek and receive feedback from the profession on what advice or issue could be left out or refined. If you have any feedback, please let us know. Is it compulsory to follow the protocol? No. The protocol was created as an aid for conveyancers. It is not compulsory to use (nor are Lexon’s letters and checklists) and your entitlement to indemnity under the Lexon policy is not predicated upon its use. However, if the error which leads to the claim is something that the protocol addresses then you will be required to pay a deterrent excess unless you made a bona fide attempt to comply with the protocol – either by showing you used Lexon’s tools or you had a comparable system of your own. Will a conveyancing claim always result in a deterrent excess? No. Since the 2007/08 year, Lexon has managed over 380 conveyancing claims and a protocol deterrent excess has been collected in less than 8% of these cases. Is the conveyancing protocol working? Yes. Since the protocol was introduced, we have seen a marked downward trend in the number and value of conveyancing claims. This downward trend is representative of better file management within conveyancing practices which augers well for the future. Whydowehavea conveyancing protocol? April hot topic Lexon Insurance Pte Ltd ARBN 098 964 740 Incorporated in Singapore Registration No: 200104171C Note 1 Subject to the specific terms and conditions set out in the relevant Certificate of Insurance • Lexon now provides an additional $10,000 cover for the defence of any Legal Services Commission complaint made against an insured practitioner, free of charge.1 • Acquiring another practice or taking on a principal or legal staff from another practice may activate the ‘Prior Practice Rule’. This can affect how your levies are calculated and could mean you assume responsibility for the acquired entity’s claims performance. You can find out what to look out for and ways to minimise this risk – like using the Acquisition Endorsement which was introduced for the 2014/15 insurance year – in an information sheet available on the Lexon website (lexoninsurance.com.au). Did you know? Lexon Insurance Pte Ltd is a wholly owned subsidiary of Queensland Law Society.