Post on 21-Feb-2016
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PROFESSIONAL INDEMNITY INSURANCE
COUNCIL OF ENGINEERSJANUARY 22, 2014
Transferred Risk(Insurance)
Reduced Risk(Safety Measures)
Avoided Risk
Retained Risk
Level Of Risk
RISKS MANAGEMENT – MIX STRATEGY
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).
PROFESSIONAL INDEMNITY INSURANCE (PI)
DEFINITIONSWrongful 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.
Retroactive Date1/1/2011
2011
Claim Made16/11/2013
Claim first made on 16/11/2013, Wrongful act happen on 15/5/2012
2012 2013
Wrongful Act15/5/2012
2014
1st Policy 2nd Policy 3rd Policy
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.
Limit of policy, Up to client, Normally Limit ~ USD 1 M – USD 20 M
Deductible, ~ > USD 10,000
Premium, ~ > USD 7,000
PROFESSIONAL INDEMNITY INSURANCE (PI)Policy schedule
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
Type of Policies
- Libel and Slander
- Project Management
- Outgoing Principals
- Loss of Documents
- Intellectual Property
- Joint Venture Liability
- Consultants, Subcontractors and Agents
- Run-off Cover Insured Entity or Subsidiary
POLICY EXTENSION- Estates and Legal Representatives
- Acquired Entity or Subsidiary
- Fraud and Dishonesty (Optional)
- Increased Aggregate Limit of Indemnity
(Optional)
- Prior or Pending Claim
- Known Claim & Known Circumstance
- Fraud and Dishonesty
- Assumed Duty or Obligation
- Related or Associated Entities
- Fines and Penalties
- Punitive Damage
- Nuclear
STANDARD EXCLUSION- Supply of Goods
- War & Terrorism
- Absolute Asbestos
- Previous Business
- Bribe & Illegal Payment
STANDARD PREMIUM PRACTICE
Business Type
Annual Report & Overall business
Experience & Qualification
ClaimHistory
Limit of liability
Deductible
PROFESSIONAL INDEMNITY INSURANCE (PI)
Non Preferable Risk
* Geotechnical / Soil * Environment Engineering * Nuclear Engineering * Mining Engineering * Chemical Engineering * Aeronautical / Space Engineering * Marine / Naval Engineering * Offshore Platform Engineering
Limit of Capacity USD 20 M USD 5 M – 10 M USD 10 M
Single Project Period 7 Years > 10 Years 1.5 Years
LOCAL CAPACITY USD 5 M – USD 20 M
INTERNATIONAL CAPACITY USD 10 M – USD 30 M
Example Of Local Capacity
Market Capacity
Client
Application
Insurers
1. Insured complete Application Form submit to Broker.
2. Broker approach the markets for insurance terms.
3. Broker return Quotations with suggestion to Insured.
4. Insured select the prefer one, then receive Policy from Broker while Broker continue support for any claims that may occur.
PROCESS OF BUYING POLICY
Broker
Policy
Insurer InsurerInsurer
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
6 Storeys Shopping Complex at Samutprakarn, Concrete Beam Cracked in 2013
Rectification Cost approx 6mb
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
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
INSURED
INSURANCE
CLAIMANT
Claim First Made
ClaimPay damages, Indemnity
Pay Defense, In
vestigation
BROKER
Broker report claim andassist Insured to get their Claim.
Consult
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CLAIM PROCESS
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 other written
correspondence from the claimant etc. (if any). 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.