Practice Management

Risk Alert Bulletin - July 2017


The 2017/2018 scheme year commences on 1 July 2017. We have pleasure in bringing you the PI and Executor Policies for the new insurance year. Practitioners are urged to study the two policies carefully in order fully appreciate the terms and conditions of both documents.

The 2017/2018 PI Master Policy
It will be noted that PI Master Policy remains unchanged from that applicable to the 2016/2017 scheme year. However, we need to highlight the following:

  • The limits of indemnity and deductibles remain unchanged (Schedules A and B, respectively).

  • Insured firms must give immediate written notice to the AIIF of any circumstance, act, error or omission that may give rise to claim (clause 22(a)).

  • Written notice must be given to the AIIF by no later than one (1) week after receipt by the insured firm of a written demand, summons/counterclaim or application (clause 22(b)). In the event of a failure by the insured firm to comply with the obligation to give notification of a claim in this regard, the AIIF reserves the right not to indemnify the insured firm for costs and ancillary charges incurred prior to or as a result of such late notification.

  • The completion of the risk management questionnaire and claim form are obligatory (clause 23).

  • Insured attorneys must give the AIIF or its appointed agents their cooperation (clauses 25, 27 and 29).

  • The exclusion of cybercrime and certain bridging finance related claims (clauses 16(o) and 16(i), respectively).

  • The higher excess applicable in respect of prescribed RAF claims, conveyancing claims as well as claims involving dishonesty (see Schedule B).

There are still instances where, after receiving notification of a claim, the insured firms give the AIIF late notification (or do not notify at all!) in respect of the set down of matters for hearing or that a notice of bar has been issued against them. The effect of this is that the AIIF is severely prejudiced in the conduct of the insured’s defence in the matter. Going forward, the AIIF will enforce its rights in so far as any prejudice is suffered in this regard.

The 2017/2018 Executor Bond policy
The R5 million limit in respect of a bond per estate and the cumulative amount of R20 million in exposure to any one firm remain unchanged (clause 4.1). Practitioners must report to the AIIF where the administration of the estate has been completed and a release issued by the Master of the High Court.

The AIIF will not issue bonds of security to attorneys seeking appointment in any capacity other than as executor (clause 2.1) - bonds of security will thus, for example, not be issued to attorneys acting as agents for executors, trustees of insolvent estates or as representatives appointed in terms of section 18(3) of the Administration of Estates Act 66 of 1965.

The following changes have been made to the 2017/2018 Executor Bond Policy:

  • the AIIF will have regard to the information supplied in the application and any other relevant information at its disposal in deciding whether or not to issue a bond to the applicant. The decision whether or not to issue a bond remains within the sole discretion of the AIIF (clause 1.2)

  • no bonds will be issued, inter alia, where the applicant has either been found guilty by a court or a professional regulatory body of an offence or an act involving an element of dishonesty, or by reason of a dishonest act or breach of a duty, been removed from a position of trust.

Copies of the application form and the resolution (annexures A and B to the policy- referred to in clauses 3.1 and 3.10, respectively) as well as the list of documents to be submitted in support of the application for a bond can be accessed on the website

The AIIF continues facing serious challenges in respect of the long tail nature of this line of business. The outstanding exposure is currently over R11 billion and some of the bonds making up this total were issued more than 16 years ago. Many practitioners in whose favour bonds have been issued simply do not inform the AIIF when the administration of the estate has been finalised. A number of measures have been implemented in an attempt to reduce the outstanding liability, which include the dispatch of regular correspondence to those attorneys with long outstanding bonds as well reporting of the conduct of the affected attorneys to the respective law societies. Practitioners in whose favour bonds have been issued are urged to conduct an audit of their practices and to advise the AIIF on the status of the matters concerned, if they have not already done so.

The AIIF team will gladly answer any queries relating to the two policies. We wish you all a claim free 2017/2018 scheme year!

July 2017 Risk Alert Bulletin with both policies

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