Risk management

Audit will avoid assigned risks pool

The solicitors' profession's new insurance arrangements are now in force.

For the foreseeable future, a firm's claims record will be a key factor in determining the cost of professional indemnity cover.

If you're happy with your premium because your firm has a good claims record, don't be complacent.

Can you be sure how long this will last? And if you have a chequered claims history, how will you convince insurers that your firm's risk profile is improving?It may be that your firm has never had a claim, and you believe that you will never have a problem obtaining insurance cover at an advantageous rate in the future.

This is a dangerous assumption to make.

You could have an exemplary claims record more through luck than judgement.

Many firms with good claims records have become firms with bad claims records in a relatively short period of time.

The dishonest partner defrauding clients, an incompetent solicitor holding him or herself out as an expert in an area of law he or she knows nothing about ...

whatever the cause, suddenly your firm's record changes from one claim in 10 years to 10 claims in one year.Stock excuses such as 'don't worry, the problem is solved, we have sacked the solicitor', or 'the claims all came from a branch office which we have closed down' simply won't wash with the commercial market.

They will want to know why the claims arose.

What basic risk management systems did you have in place to prevent or reduce the risk of the claim arising? What risk management systems have you put in place to prevent a repetition? The answer to both questions is often none.

The responsibility for a claim rests with the firm and the firm alone.

There is a duty on the firm to carry out the work in an error free and timeous manner, and to have a risk management structure in place to ensure that this happens.

Failure to do this increases a firm's exposure to the risk of claims.

If you get a bad claims record the assigned risks pool will beckon.

Adapt for the future now.

Complete your SIF self-assessment risk audit, the most comprehensive risk management tool available.

Identify where you are exposed to risk, and address those areas.

Do not become one of the casualties of the open market.

Become one of the successes.

l For information on claims prevention, contact the risk management team at St.

Paul International, tel: 020 7645 6918.