Seminar
During May ProRisk in conjunction with DLA Piper, Fox Tucker and Dobson Mitchell & Allport Lawyers conducted Seminars in Melbourne, Sydney, Brisbane, Perth, Adelaide, Canberra and Hobart. The Seminars focused on the dangers of brokers conducting contract reviews for clients and the importance of an insurer’s credit rating.
The key points made in relation to contract reviews were:
Brokers have a duty to understand key concepts of liability in insurance law. However, this can be discharged by recommending that clients seek legal advice in appropriate circumstances.
When being asked to conduct a contract review, key items to look for are:
 Indemnity clauses given to clients as the assumed liability exclusion will be relevant.
Whether or not the insured uses subcontractors to do the work (and if so what is the insurance arrangement with the subcontractor).
Any clause that obliges your insured to take out insurance for another party as these will usually require legal advice.
The key points made in relation to an insurer’s counter-party risk rating were:
Risk ratings are by no means a guarantee of the financial longevity of an insurer however there is a strong correlation between the risk rating and the relative likelihood of financial default.
In the case of reinsurers, there is (historically) greater financial volatility and at all levels of rating a higher potential for financial distress or downgrade than that associated with insurance companies. A major empirical study suggested that an A rated reinsurer has about a 10% chance of financial impairment under stressed scenarios whereas a BBB rated reinsurer has a significantly greater chance of impairment - above 60%!
Brokers must satisfy themselves that the security they use for clients is appropriate. They must make the enquiries that a reasonable broker would make to satisfy themselves about the financial soundness of insurers they use or recommend, which means going beyond reliance on the simple fact of an insurer being APRA-authorised. Counter-party risk ratings provide a “defence” which is critical, because professional Indemnity policies taken out by brokers invariably contain an exclusion relating to liability flowing from the financial default or failure of insurers!
There were over 300 attendees nationally and there are plans for a further Seminar in October. Copies of the overheads and the paper prepared by David Leggatt of DLA Piper on the Dangers in Conducting Contract Reviews are available on the ProRisk website.
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Tax and BAS Agents
From the 1st of July 2011 all registered tax or BAS agents are required by law to purchase Professional Indemnity Insurance. ProRisk have already been providing competitive quotes on tax and BAS agents on both Professional Indemnity and Liability (including Bookkeeping). Our minimum premium on Professional Indemnity for a $250,000 limit is $275 plus government charges and a underwriting fee. As the deadline approaches please keep ProRisk in mind for fast and competitive quotes.
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Benefits of a Strong Security
Established in 2003, ProRisk is an Underwriting Agency offering products primarily backed by Lloyd’s – a world leading insurance market for over 400 years. We understand that claims can take many years to settle, and the strength of the Underwriter is of critical importance in protecting your client’s assets. Lloyd’s has a S&P rating of A+ (Strong) and A.M. Best rating of A (Excellent) giving peace of mind for you and your client that if a claim eventuates we will be there when it’s needed most.
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Did you know
ProRisk is best known as a specialist in Professional Indemnity insurance but did you know that we can also offer:
Medical Malpractice
Public and Products Liability
Personal Accident
Specified Items in Transit (Tools of Trade)
Management Liability
Information Technology Insurance
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Feel free to contact a member of the team with any queries.
ProRisk your problem solving underwriting solution.
Email: enquiries@prorisk.com.au
Phone: 03 9235 5255
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