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2017 Professional Indemnity Insurance Renewal | Premium, Terms and Conditions (Circular No 170/2016)

Circular No 170/2016
Dated 4 Aug 2016

 
To Members of the Malaysian Bar
 

2017 Professional Indemnity Insurance Renewal | Premium, Terms and Conditions

Kindly take note that there will be an increase of RM50 per lawyer in the 2017 Professional Indemnity Insurance (“PII”) premium.  Therefore, the premium for the 2017 PII Renewal isRM1,190[1] per lawyer.  The terms and conditions remain unchanged.

We were regrettably unable to prevent this increase, as the substantial surge in the claims experience has had a direct impact on the premium rates.  This increase is also reflective of inflation, and of the fact that the last increase was in 2004.   

Since 2006, we have negotiated aggressively, and moved away from the London markets for a reinsurer.  This resulted in a reduced base premium, which has been maintained at RM1,140 per lawyer for the last four years. 

The table below provides a summary of the premium amounts paid by Members since 2006.

Year

Insurer’s Premium 
(RM)

Base Premium 
(RM)

Excess (RM)(channelled to Professional Indemnity Fund)

2006

1,500

1,500

nil

2007

1,425

1,425

nil

2008

1,300

1,300

nil

2009

1,300

1,300

nil

2010

1,230

1,300

70

2011

1,125

1,200

75

2012

1,068

1,200

132

2013

1,015

1,140

125

2014

1,015

1,140

125

2015

1,015

1,140

125

2016

1,015

1,140

125

2017

 

1,065.75
(rounded to 1,065)

1,190

125

For the 2017 PII Renewal, the Insurer has increased the premium from RM1,015 per lawyer to RM1,065.75 per lawyer.  This is an increase of RM50.75 (ie 5%) per lawyer, as provided for under the three-year agreement (“TYA”).[2] 

Members are advised to carry out good risk management practices in their law firms and ensure the use of checklists for each file.  With proper care and due diligence, firms can avoid the possibility of facing negligence claims.

The contribution towards a Self-Insurance Fund (“SIF”) is maintained at RM125 per lawyer.  The Professional Indemnity Fund continues to slowly grow but is still insufficient to start a SIF even if the necessary approval from the Attorney General’s Chambers is acquired.

2017 PII Scheme Terms and Conditions

The terms and conditions for 2017 remain unchanged.  The salient terms of the 2017 PII Scheme are as follows:

No

Item

Terms of 2017 PII Scheme


(1)

Mandatory limit of indemnity

Minimum: RM250,000  (one lawyer)
Maximum: RM2,000,000  (36 lawyers and above)
Cover for a firm increases by RM50,000 for every additional lawyer, up to a maximum of RM2,000,000.


(2) 

Dishonesty of

  • partner
  • employee

Coverage limited to RM350,000 in the aggregate, or the firm’s mandatory limit, whichever is lower.
Limited coverage for dishonesty is aimed at encouraging law firms to adopt risk management practices.


(3) 

Mitigation of loss rider clause

This clause provides protection for a firm’s clients’ monies, as defined under the Solicitors’ Accounts Rules 1990.
Innocent partners of a firm can be indemnified for mitigating action(s) taken due to embezzlement of clients’ monies, subject to the terms of the policy.


(4) 

Defamation

Coverage is the firm’s mandatory limit of indemnity.  
Applicable to each and every claim.


(5) 

Notification of circumstance/claim

Notification period is 60 days of becoming aware of a circumstance/claim.


(6) 

Claims loading

Claims loading is calculated at either:
(a) 5% of claims paid; or
(b) 5 x 2017 base premium, whichever is lower.  
Claims loading is subject to a further maximum cap of 25% (to apply over the period of five years).


(7) 

Reduced excess option

Firms can opt to lower their base excess, subject to payment of an additional premium.


(8) 

Worldwide coverage option

Option for worldwide territorial and jurisdictional coverage is available to all firms at an additional premium.

2017 PII Renewal — Online Renewal System 

Members are encouraged to renew their PII online, for faster and convenient renewals.  More than 80% of law firms have opted to renew online at the last PII renewal.

On 16 June 2016, Jardine Lloyd Thompson Sdn Bhd (“JLT”) — the PII Scheme broker — sent an email to all law firms, requesting that each firm nominate an authorised person to submit the 2017 PII online proposal form.  This is a prerequisite to access the PII online renewal system. 

To renew your PII online, go to www.PRAKTIS.com.my.

We urge each law firm to nominate its authorised person and submit the online proposal form, as the firm’s invoice will be produced instantly (should the firm have no pending claims).  The PII renewal is expected to commence on 8 Aug 2016.

Help Desk 

(a) PII and Risk Management Department

 
If you require further clarification or have any suggestions regarding PII and risk management, or have an issue with a claim or the services of the PII Scheme’s broker, please contact the PII and Risk Management Department by telephone at 03-2032 4511, or by email at pirm@malaysianbar.org.my.

Your feedback is vital to the continuous improvement and progress of the PII Scheme.

(b) Jardine Lloyd Thompson Sdn Bhd

If you have not received the email from JLT regarding the nomination of an authorised person to complete the online proposal form, require assistance on the online submission, or have any queries with the 2017 PII online proposal form, kindly contact JLT directly by telephone at 03-2723 3388 (general line) / 03-2723 3241 (dedicated for the Malaysian Bar).

Thank you.

Ragunath Kesavan 
Chairperson 
Professional Indemnity Insurance Committee

____________________________________________

[1] The figure consists of the insurer’s premium of RM1,065 (rounded down from RM1,065.75) and the contribution to the Self-Insurance Fund of RM125.

[2] 2014/15 Annual Report of the Malaysian Bar, page 339.