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LAWPRO holds insurance premium increase to 5% in 2005
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Toronto, ON, Sept. 23, 2004: The base insurance premium paid by most Ontario lawyers will increase to $2,625 per lawyer in 2005 from $2,500 in 2004 -- a five per cent increase.
The $125 increase is the first in 10 years and is the result of increased claims costs and declining premium revenues from transaction levies. Between 1995 and 2004, premium levels fell consistently from a high of $5,600 to $2,500 in 2003 and 2004.
Premiums for many lawyers in 2005 will be significantly below the base $2,625 mark, with some lawyers paying as little as $1,178, depending on the practice and coverage options selected. Premiums for other insurance coverage, transaction levies and discounts will remain the same as they were in 2004.
The increase in the base premium is the result of two diverging trends: Claims costs, which have remained in the $65 million range in earlier years, have increased in 2004. This increase can be traced to fraud-related claims as well as those resulting from incivility, shortcomings in client loyalty and conflicts.
At the same time, premium revenue from transaction levies is expected to continue to decrease. In particular, real estate transaction levies have declined, reflecting an increase in the use of title insurance.
Revenue to meet the forecasted $78.5 million in total costs for the insurance program in 2005 will come from three sources: $48.6 million from base premiums (based on 19,800 insured lawyers); $21.2 million from transaction and claims history surcharge levies; and $8.7 million from the premium stabilization fund.
Law Society-approved indemnification agreements a must for title insurers
The policy presently exempts lawyers and law firms from having to pay the $50 real estate transaction levy surcharge for transactions that are title insured, provided the title insurer has waived its rights and agreed to indemnify and save harmless the lawyer/law firm against claims arising under the title insurance policy or policies. This exemption reflects the core insurance program's reduced exposure to claims in situations where this protection is in place for lawyers.
Effective January 1, 2005, the professional liability insurance policy will be changed so that the exemption from having to pay the real estate transaction levy surcharge applies only in situations where the title insurer has entered into a release and indemnity agreement in a form satisfactory to the Law Society. This change will minimize the administration required of lawyers and law firms, and will ensure that the required release and indemnity agreement is in place on a consistent basis.
The bar will be advised of which title insurers have entered into release and indemnity agreements satisfactory to the Law Society. In situations where the title insurer does not provide this type of agreement, lawyers acting on these transactions - even if they are title-insured - will have to pay the real estate transaction levy surcharge.
Lawyers' Professional Indemnity Company (LAWPRO) is a wholly Canadian-owned insurer providing a diverse range of insurance-related programs, services, and resources, including title insurance, to support the legal community in numerous jurisdictions across Canada.
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January 31, 2018