Editor's Notes: Proposed amendments to the LPIIF Master Policy explained
It will be remembered that the Legal Practitioners’ Indemnity Insurance Fund NPC (LPIIF) issues one Master Policy (the policy) which is applied to all insured legal practitioners – please refer to clause 5 of the policy for a list of who is an insured.
The LPIIF intends making amendments to the policy in order to:
- Better articulate the intention behind the affected clauses;
- Remove any potential ambiguity in the interpretation; and
- Improve the dispute resolution mechanism in clause 40.
It must be noted that the proposed amendments do not introduce any new exclusions and that the amount of cover (limit of indemnity) and the deductible (excess) payable remain unchanged.
The proposed amendments will come into effect on 1 July 2019. We are publishing the proposed amendments at this early stage in order to give the profession and all other stakeholders sufficient notice of the conditions under which cover is to be offered under the policy in the new insurance scheme year commencing on 1 July 2019.
Any queries and/or comments regarding the proposed amendments should be directed to the LPIIF team.
The proposed amendments are as follows:
- The name of the company has been changed from the “Attorneys Insurance Indemnity Fund NPC” to its new name, “Legal Practitioners’ Indemnity Insurance Fund NPC”;
- Definition I – reference to the Attorneys Act has been removed. Act will mean the Legal Practice Act 28 of 2014;
- Definition IV – reference to section 25 of the Attorneys Act has been replaced by the corresponding section, (section 53), of the Legal Practice Act providing for the continued existence of the Fidelity Fund;
- Definition VI – the explanatory note and the definition have been combined;
- Definition IX – Cybercrime: clarification has been added that the hacking of any of the electronic environments is not a necessity in order for the exclusion to apply. Some practitioners were, incorrectly with respect, of the view that hacking of their electronic environments must have taken place before cybercrime exclusion will apply. In the event that your practice has cybercrime cover in place, please check the wording of that policy as well in order to ensure that there is no gap in cover;
- Definition XII – Employee: reference to “candidate attorneys” has been replaced with “candidate legal practitioners” in order to include candidate attorneys and pupils in line with section 1 of the Legal Practice Act. Advocates with Fidelity Fund Certificates (FFCs) will now be covered by the policy and so will their pupils;
- Definition XIV - Fidelity Fund Certificate: Reference to section 42 of the old Act has been replaced with reference the corresponding section (section 85)of the new Act;
- Definition XX: Legal Services: Legal services relate to the conduct of a legal practice in terms of section 33 of the Act;
- Definition XXI – Practitioner: it has been clarified that advocates practising in terms of section 34(2)(b) fall within the definition of practitioners in the policy;
- Definition XXIV – Risk Management Questionnaire: (1) reference to “an advocate referred to in section 34(2)(b)” has been added; and (2) a clarification of when the questionnaire should be completed and where to obtain the information regarding the completion thereof has been included;
- Definition XXVI - Senior Practitioner: a requirement for experience in professional indemnity insurance law for the Senior Practitioners to whom dispute resolution referrals are made has been added;
- Clause 4 – the order of the words has been changed in order for the clause to read better;
- Clause 5(d) – a clarification that advocates with FFCs will be regarded as sole practitioners for purposes of the policy has been added. This is in line with section 34(6) of the new Act. This change seeks to avoid a situation where a group of advocates with FFCs purport to practise together in some form of partnership or association and therefore assume that they are entitled to a higher limit of indemnity;
- Clause 6(d) - reference to “legal representatives of the people...,” has been removed as it may create confusion if interpreted as referring to legal practitioners representing the estates referred to;
- Clause 16(b) - reference to section 26 of the Attorneys Act is replaced with section 55 (the section dealing with the liability of the Fund) in the new Act;
- Clause 16(m) - the words “and is part of the scope of the mandate to carry out legal services” have been added in order to clarify that when the under lying mandate to carry out legal services has been has been completed, the insurer carries no obligation to indemnify an insured who thereafter act as paymasters making payments unrelated to the legal services which had been carried out;
- Clause 16(o) - where new bank account details are provided to an insured, these should first be verified in terms of Rule 53.14. Insureds failing to comply with their obligations in terms of the Rules and being defrauded into paying into incorrect accounts, and thereby losing their clients’ funds to cybercrime scams, will not be covered. This risk can be insured in the commercial market under the various types of policy available.Various products from banks and other service providers offer facilities which can be used to verify the banking details of the intended recipients. The banking products approved by the Fund offer a verification service;
- Clause 40 – Dispute Resolution Clause – (a) we have clarified that the determination of a Senior Practitioner is not an arbitration award. This is to dispel the notion that a determination can be made an order of court as if it was an arbitration award; and (b) we have removed all reference to the Short-Term Insurance Ombudsman (STIO) as that office does not have any jurisdiction over professional indemnity claims.
For ease of reference, we have included the policy with the suggested changes underlined thereon.
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Telephone: (012) 622 3928