Calabro, Dominic --- "Professional Indemnity Insurance" [1986] AboriginalLawB 43; (1986) 1(21) Aboriginal Law Bulletin 4

• Professional Indemnity Insurance
• Professional Indemnity Insurance: The Victorian Situation
• Situation Around Australia
• Conclusion

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Professional Indemnity Insurance

by Dominic Calabro

Professional Indemnity Insurance is a hot topic amongst people working in community legal centres and Aboriginal legal services. In an attempt to inform people of the situation and to foster co-ordination in dealing with PIS, Dominic Calabro from the Victorian Aboriginal Legal Service In Fitzroy, has presented the following article.

Professional Indemnity Insurance: The Victorian Situation

Community Legal Centres (CLC) and the Victorian Aboriginal Legal Service (VALS) have for some years been involved in a group Insurance scheme for Professional Indemnity Insurance. A total of approximately 25 centres are involved in the scheme. What this meant was that the group scheme would 'piggy back' onto the Law Institute's Professional Insurance Scheme. This meant that insurance for centres in 1985 was between S458 and $600 per annum and this policy would cover all workers within their respective organisations (professional and non-professional staff and voulunteers). The Group Scheme was made attractive to both the law institute and the Insurance organisation by the fact that the group set up its own self monitoring system and also produced an insurance manual with which all centres set minimum standards for file of review. Once a year workers from one centre would go to another legal centre and review their office. Inter alia, procedures and recording of advice. For example, the person would view three open files and three closed files, client attendance books, or the telephone advices given and how they are recorded. In addition, the service would have weekly reviews of files and case planning meetings.

In September of 1985 we were informed by the Victorian brokers. Minet that the premium for year 1986 would increase substantially. We were advised that this was due to the current position around the world with regards to Professional Indemnity Insurance. In particular the American market, and that the Law Institute of Victoria had decided to self insure. This means that the Law Institute levies a premium on its members and then reinvests the premium to build a pool to act as a buffer against any claims it also has obtained 'disaster insurance' to cover any possible claim until that premium pool is built up.

Telex's were sent to the Attorney-General's department and to the Department of Aboriginal Affairs and to the Mlnister for Aboriginal Affairs.

While the Attorney-General's Department responded relatively quickly, we received no response whatsoever from the Department of Aboriginal Affairs, the group continued to meet with its broker and obtained two quotes from respective insurance companies. The quote for VALS Insurance Policy was from some $600 per annum to 57.300 per annum. this was largely based on VALS yearly budget (less brief out and other related costs). Insurance companies did not take into account, nor did they want to take into account, the claims experienced in Victoria and that is that there have been no payouts on any claims, although there have been notices of claims.

VALS decided to contact all ALSs around Australia and forwarded a questionnaire to them to see if they were experiencing problems with Professional indemnity Insurance. There was great difficulty in organising responses from the separate ALSs around Australia; we received responses from many but not all ALS's. The experience around Australia seems to be that Professional Indemnity Insurance premiums are increasing at a great rate, that the policies were varied and the cover varied greatly amongst the states, but most importantly the majority of these policies only covered Lawyers employed in ALSs.

A meeting was held In February 1986 with representatives of the Victorian Group Scheme including VALS, the Attorney General's Department, the Insurance Council of Australia and the General Manager of Sun Alliance Insurance. The meeting basically agreed that In view of the world situation on Professional Indemnity Insurance and the fact that there are only 3-4 Insurance companies which handle Professional Indemnity insurance, that the Attorney-General's Department should look at Indemnifying all CLC's and ALS's to a point of $500,000 per claim for each centre and each centre would insure, If they wanted to. with 'Disaster Insurance' over and above that.

Despite numerous phone calls and telex's to the Department of Aboriginal Affairs pointing out the Victorian situation and the increased premiums. It was not until a press release was forwarded to the Minister for Aboriginal Affairs' office that the Department finally agreed to make a one off payment towards VACS Insurance Premiums.

Another meeting was called in May of 1986. Those who attended were representatives of CLC's, VALS, Attorney-General's Department, DAA and Marsh & McLennan who are the consultants to the Commonwealth on insurance matters. A confidential report had been prepared by the Attorney-General's Department and had been forwarded prior to the meeting to DAA and the consultants, however a copy was not given to VALS or CLC's representatives. What came out at this meeting was that nine proposals listed in that confidential report were all but rejected including the proposal for indemnity by the Commonwealth a rd the argument was that the Commonwealth would not indemnify a non-Government organisation and particularly would not indemnify open-ended. What was proposed was a type of self insurance where all premiums would be paid into a pool. and that would be re-invested and that insurance would be obtained for the disaster component The VALS rep and the CLC's rep disagreed with this proposal and pointed out that indemnity would be the best option which would also entail that the Commonwealth indemnified all ALSs and CLC's up to a level of $500,000 and that the individual legal centres would ensure over and above that amount at their own option lit is to be noted that the $500,000 is for each claim per centre). Since that meeting discussions have taken place amongst CLC's and they have suggested that each state around Australia set up an insurance Committee based broadly on the Victorian model (cross checks insurance manual etc).

Since the original meeting in May 1986 the Department of Aboriginal Affairs has contacted its regional offices to obtain details about insurance policies, claims and possible claims. They have also asked all ALSs whether they would prefer a central body to co-ordinate Professional Insurance and other matters, however no structure has been proposed.

N.B. Marsh & McLennan also propose that as a part of that self insurance scheme that an organisation be set up in Canberra to deal with this The Attorney-General's Department nor the Department of Aboriginal Affairs have been able to provide a structure of this organisation and what its responsibilities would be.

Situation Around Australia

All states have compulsory Professional Indemnity Insurance (Western Australia has been looking at legislation, however this has not been drafted to my knowledge). The other problem we have with ALSs is that Queensland and Tasmanian solicitors cannot be employed by the ALS's. In fact separate practices are established with a retainer agreement with ALS's. This causes greater problems in that their insurance policy would only cover the lawyers and employee article clerks, but not Field Officers and Financial Counsellors.

Conclusion

It is vitally important that ALS's meet to discuss this problem about Professional Indemnity Insurance. What could result from the Attorney-General's and the DM's proposal is that an organisation in the ACT would deal with organising insurance for ALSs and CLC's probably requiring yearly reports and statistics from these organisations. We have not been told whether this will be a public service post or whether representatives from ALS's and CLC's will be on this organisation. It is most likely in the future that Professional indemnity Insurance Premiums will continue to rise at an ever increasing rate and that it is the responsibility of the Commonwealth Government aid Department of Aboriginal Affairs to minimise the costs of this Insurance. The belief is that the Commonwealth could indemnify all ALSs and CLC's to a level (i.e. $400,000 per claim per centre) together with each state having their own Professional. Indemnity Insurance group as a monitor over themselves.