New year, new contact
Lockton’s first article as Master Policy broker sets the risk management scene in 2017 and the services available from Lockton
New Year is typically a time of new resolutions, and plans for the future.
Lockton has, from 1 January, assumed the role of broker for the Master Policy. We have met our first resolution of the new year, by launching our dedicated website for Scottish solicitors. It is your first port of call for information about the Master Policy, claims, and risk and compliance management.
Following a number of queries from practitioners since our appointment, we have produced a short guide to the Master Policy which addresses the most commonly asked questions, and explains more fully our role as broker.
Key topics include:
- What is the Master Policy?
- Lockton’s role as broker
- Who are the Master Policy insurers?
- How to make a claim
- Terms of cover
- How your premium is calculated
- What and when to notify.
Please note: ALL claims and circumstances that could give rise to a claim must now be notified to Lockton.
You can read the full guide, which includes details of how to notify us of any claims or circumstances, on our website at www.locktonlaw.scot/masterpolicy
You can also learn more about Lockton by attending the Law Society of Scotland’s “meet the broker” roadshow – the first of which is in Edinburgh at 6pm on 17 January at the Society’s offices in Edinburgh. If you are an Edinburgh practice and have not already received an invitation, or would like to express an interest in attending an event elsewhere in the country, contact David Cullen, registrar at the Law Society of Scotland (firstname.lastname@example.org).
2017 risk outlook
As the incoming broker, Lockton has reviewed the latest claims trends emerging from the profession in Scotland.
The Master Policy claims statistics show a consistent decline in claim numbers over the last four years. Following a period where the loss ratio of the Master Policy has more often been negative than positive, this provides welcome relief for insured practices and insurers alike.
No more “boom and bust”?
There nonetheless remain concerns that this lull in claims may only be short lived. Added to that, while claims frequency may well be lower, the severity of losses, especially from commercial work, appears to be on the rise.
Residential conveyancing has seen the greatest reduction in claim numbers – but this was from an all-time high in notifications between 2009 and 2011, and insurers remain concerned that such claims often lie dormant for years, only to emerge during a recession. In the current political and economic climate, there is a real concern that another economic downturn could be triggered at any time.
While property claims tend to be “long tail”, arising many years down the track, a new wave of cyber/fraud claims has emerged, and these claims crystallise much earlier. UK-wide, professional indemnity insurers have paid out several million pounds in 2016 alone, as a result of client account thefts – often facilitated by a cyber breach.
Claims trends for 2017
We have identified five main claims trends for 2017:
Despite the significant fall in claims, CML handbook lender claims remain one of the single largest causes of claims as a percentage of all intimations.
Time bar and delay
The tougher court rules and ongoing failures in diary management and identifying critical dates mean that time bar and missed time limit claims remain prevalent. Delay also gives rise to claims in most other areas of practice.
Inadvertently providing access details to your firm’s client account has been a significant emerging claim type in 2016.
Frauds facilitated by a breach of IT security are a major component of these claims, reflecting the increasing sophistication of criminal attacks, and a specific targeting of law firms.
Tax related claims
Claims from clients who have either paid more tax than they should, or not been able to avoid the tax liability they were seeking to, have increased. The fallout from failed tax schemes continues to produce a number of claims. Another troublespot has been the changes to SDLT rates and the reductions available. Attempts to avoid liability by excluding tax advice from your scope of engagement will not be effective in all instances.
Scoping and billing
While not strictly a claim type, inadequate scoping often causes problems down the line. Often, issues only become apparent at the billing stage. Keeping clients informed, and keeping an eye on billable time on a file, alongside occasional review of work against scope, will help reduce the volume of claims and complaints.
Every practice will have its own particular risk profile, and we recommend that you maintain an ongoing analysis of claims, complaints and near misses. This enables you to monitor your risk exposure most effectively, and manage it with our support.
Risk management resources from Lockton
In the first quarter of 2017, we are focusing on fraud risks, particularly those with a cyber angle. People are both your first line of defence, and also your greatest “cyber risk”.
We have produced a range of information security posters that you can either download, or order in hard copy from Lockton. These help keep information security front of mind, when used round the office.
We also are launching a short e-learning module on password security, which incorporates the latest best-practice guidance, both for staff (using passwords) and management (what password rules you should implement). The advice may not be what you expect!
To access our latest cyber or information security and fraud resources, simply log on to www.locktonlaw.scot and click on the Resource Centre, where you can search by topic for the information you require.
Our website will be regularly updated over the coming weeks and months, so don’t forget to check back at regular intervals. You can also sign up for our e-bulletins, which showcase some of the latest content.
Calum MacLean is Lockton’s Director of Risk for Professions. He is a qualified solicitor who has specialised in risk management since leaving private practice in 2008.
Siobhan Fogarty qualified at the Irish bar and is now a client director in Lockton’s Master Policy team.