The Alberta Lawyers Indemnity Association (“ALIA”) is rolling out two major changes to the indemnity program’s Group Policy coverage: the addition of a late notice provision for claims or potential claims first made after June 30, 2020, and restrictions on foreign law coverage that will become effective a year from now on July 1, 2021.
What is changing?
ALIA has amended the Group Policy to include a late notice provision for claims, and for circumstances that could reasonably be expected to give rise to a claim, however unmeritorious (“potential claims”), that are first made against a member of the Law Society of Alberta who participates in the indemnity program (a “Subscriber”) or of which a Subscriber first becomes aware after June 30, 2020.
It remains a requirement of the Group Policy that all claims and potential claims must be reported to ALIA during the policy period in which they are first made against a Subscriber or a Subscriber first becomes aware of them. If they are not reported within the applicable policy period, coverage is denied.
There may be times when a Subscriber fails to report a claim or potential claim in a timely manner. The Group Policy amendments include a late notice provision to address this. Under this provision, a Subscriber may provide late notice of a claim or potential claim if the Subscriber establishes that the late notice has not prejudiced ALIA. The amendment is not retroactive. If a Subscriber was aware of a claim or potential claim on or before June 30, 2020, and does not report it by June 30, 2020, there will be no coverage for the claim regardless of prejudice.
Subscribers, Law Firms and Partners are encouraged to read the FAQs in the links below to understand this change in further detail.
- To read more information on these policy changes, click here.
- Law Firms and Partners, click here to understand what the late notice provisions mean for Additional Subscribers.
- Click here to view the new 2020-2021 Group Policy, which will come into effect on July 1, 2020.
Currently, the Group Policy excludes claims arising from professional services provided from an office or other location outside of Canada unless the professional services are in respect of Alberta or Canadian law and are incidental to the Subscriber’s Alberta practice.
The indemnity program has significant exposure to lawsuits against Subscribers and firms in foreign countries, most notably the United States. The largest of these claims over the past several years involved firms that also had excess insurance for these foreign law claims.
ALIA’s Board has approved revisions to the Group Policy to help limit the indemnity program’s exposure to foreign law claims, which are paid for by all Subscribers through the annual levy. These changes will come into effect for the 2021-2022 policy year and are intended to limit the exposure of all Subscribers to errors made by some Subscribers in non-Canadian matters.
Under these revisions, there will still be coverage for Subscribers and firms who are sued outside of Canada in respect of Canadian legal advice, but these claims will be sub-limited to $250,000 per Occurrence (as opposed to the general $1,000,000 limit for Occurrences). Firms who expose themselves to greater foreign law risk should purchase excess insurance if they do not already have it. Those who do have it should take steps to ensure the revisions to the Group Policy are contemplated in their excess insurance.
Coverage will also require that the claim involve domestic law or areas of law that are expressly authorized by a foreign governmental or regulatory authority and approved by ALIA as set out in a general endorsement to the Group Policy. This latter provision recognizes that some practice groups – immigration lawyers and patent and trademark lawyers – are able to practice before United States governmental agencies pursuant to the rules of those agencies.
To read more information on these upcoming policy changes,
When will the changes happen?
The new 2020-2021 Group Policy, which will come into effect on July 1, 2020, contains the late notice provision; however, it does not apply to claims or potential claims that were first made against a Subscriber or of which a Subscriber first becomes aware on or before June 30, 2020.
The new foreign law provisions will be contained in the 2021-2022 Group Policy, which will be released in June 2021 and come into effect on July 1, 2021. ALIA is giving Subscribers one year’s notice for those who have material exposure to foreign claims to arrange alternate coverage or amend existing commercial coverage for foreign law exposure. If you have questions about how to proceed, there are a number of commercial insurance brokers who should be able to assist. Subscribers with excess insurance from the Canadian Lawyers Insurance Association (“CLIA”) may also want to take this opportunity to consider their coverage in relation to foreign law matters. Generally speaking, CLIA does not cover the practice of foreign law or claims involving foreign lawsuits.