Transcript PROFESSIONAL INDEMNITY INSURANCE COUNCIL OF …

PROFESSIONAL INDEMNITY
INSURANCE
COUNCIL OF ENGINEERS
JANUARY 22, 2014
RISKS MANAGEMENT – MIX
STRATEGY
Transferred Risk
(Insurance)
Level Of Risk
Reduced Risk
(Safety Measures)
Avoided Risk
Retained Risk
PROFESSIONAL INDEMNITY INSUR
 To indemnify the insured against legal liability for any claim first
made against them during the period of insurance.
 Arising from Wrongful Act (i.e. negligent act or error & omission) in
the conduct of the Professional Services practice carried on by the
insured.
 Professional Indemnity Policy would provide cover for: compensation, and/or damages awarded against professional
 legal costs and other expenses associated with defending
legal actions (subject to consent of the insurer).
DEFINITIONS
Wrongful Act shall mean any error, misstatement, misleading statement,
act, omission, neglect or breach of duty committed, attempted or allegedly
committed or attempted, by an Insured while performing or failing to
perform Professional Services.
Professional Services shall mean services performed by an Insured solely
in its capacity as their Business Practice for or on behalf of a customer of
the Insured.
Business Practice shall mean the business conducted by the Insured, as
specified in the Schedule.
CLAIM MADE BASIS
Claims made basis shall apply only to wrongful acts which happen, and
for which claim is made against the Insured, while the insurance is in force.
Claim Made
Wrongful Act
16/11/2013
15/5/2012
Retroactive Date
1/1/2011
2011
3rd Policy
2nd Policy
1st Policy
2012
2013
2014
Claim first made on 16/11/2013, Wrongful act happen on 15/5/2012
PROFESSIONAL INDEMNITY INSUR
Policy schedule
 Limit of policy, Up to client, Normally Limit ~ USD 1 M – USD 20 M
 Deductible, ~ > USD 10,000
 Premium, ~ > USD 7,000
Type of Policies
1.
Annual Policy
- For all activities of the Insured and shall renew every year.
2.
Single Project Policy
- For Specific activity with period more than 1 year. Generally up to 10
Years.
3.
Excess Layer Placement
- In case of Higher Limit, Broker may use Local Insurance as Primary
Layer and use International Reinsurer as Excess Layer
POLICY EXTENSION
- Libel and Slander
- Estates and Legal Representatives
- Project Management
- Acquired Entity or Subsidiary
- Outgoing Principals
- Fraud and Dishonesty (Optional)
- Loss of Documents
- Increased Aggregate Limit of Indemnity
(Optional)
- Intellectual Property
- Joint Venture Liability
- Consultants, Subcontractors and Agents
- Run-off Cover Insured Entity or Subsidiary
STANDARD EXCLUSION
- Prior or Pending Claim
- Supply of Goods
- Known Claim & Known Circumstance
- War & Terrorism
- Fraud and Dishonesty
- Absolute Asbestos
- Assumed Duty or Obligation
- Previous Business
- Related or Associated Entities
- Bribe & Illegal Payment
- Fines and Penalties
- Punitive Damage
- Nuclear
STANDARD PREMIUM PRACTICE
Deductible
Limit of liability
Claim
History
Experience &
Qualification
Annual Report &
Overall business
Business Type
PROFESSIONAL INDEMNITY INSUR
Market Capacity
 INTERNATIONAL CAPACITY
 USD 10 M – USD 30 M
 LOCAL CAPACITY
 USD 5 M – USD 20 M
Example Of Local Capacity
Non Preferable Risk
Limit of Capacity
Single Project Period
* Geotechnical / Soil
* Environment Engineering
* Nuclear Engineering
* Mining Engineering
* Chemical Engineering
* Aeronautical / Space Engineering
* Marine / Naval Engineering
* Offshore Platform Engineering
USD 20 M
USD 5 M – 10 M
USD 10 M
7 Years
> 10 Years
1.5 Years
PROCESS OF BUYING POLICY
Policy
Client
1. Insured complete Application Form
Application
2. Broker approach the markets for
submit to Broker.
insurance terms.
Broker
3. Broker
return Quotations
suggestion to Insured.
Insurers
Insurer
Insurer
with
4. Insured select the prefer one,
then receive Policy from Broker
while Broker continue support for
any claims that may occur.
Insurer
ROLE OF INSURANCE BROKER
 To work for insurance related issues on your behalf
 To assist you in buying insurance and not selling
 To analyze and survey of your insurance needs and arrange the
insurance which most suits to your exposure.
 Market with underwriters different appetites and capacities.
 To clarify and discuss with you to choose the appropriate
insurance program
 To handle and manage the claim until the claim is finally settled
CLAIM EXAMPLES
CLAIM INVESTIGATION
1. What actually happened? Concrete Beam
Cracked
2. What went wrong? Incorrect Design
3. Why did it go wrong? Loading calculation
error
4. Was the Insured or one of their employees
responsible for what went wrong? Yes
 6 Storeys Shopping Complex at
Samutprakarn, Concrete Beam
Cracked in 2013
 Rectification Cost approx 6mb
5. Is the loss covered by the policy? Yes
6. Are the Insured’s business activities
correctly described in the policy schedule?
Yes
7. Was the loss notified in accordance with the
requirements of the policy? Yes
CLAIM PROCESS
1
Claim First Made
2
INSURED
CLAIMANT
Pay damages,
Indemnity
4
Claim
Consult
3
Broker report claim and
assist Insured to get their Claim.
INSURANCE
BROKER
STANDARD CLAIM PRACTICE
 The Insured must give to Broker a written notice of any Claim first
made against the Insured - as soon as practicable and during the
Period of Insurance.
 Relevant documents :
 The date in which the Insured/Company first became aware of the
matter, if other than the court summons.
 Notice letters and/or demand letter and/or
correspondence from the claimant etc. (if any).
other
written
 Other additional documents, if required.
 In case there is a circumstance which the Insured realize that it may
lead to a claim in the future, it is required by the Insurer to report
such circumstance to reserve the right of claim. Broker may also be
able to advise you about whether a situation is a circumstance that
should be notified.