Professional Liability Claims by jolinmilioncherie


									Lawyers Professional Liability

   Christopher Troisi, Zurich North America
   Denise Olson, CNA Insurance
              September 19, 2002
          Major Rating Factors
•   # of Attorneys / Size of Firm
•   Step (# of Years Claims Made)
•   Area of Practice (AOP)
•   State
•   Limits and Deductibles
•   Coverage provisions
•   Claims history
Size of Firm
      Small Firm Characteristics
•   1 - 3 attorneys
•   Tend toward Lower Risk AOPs
•   Low Limits/Deductible
•   Buying reputation protection
•   Underlying risks smaller
•   Stable partnerships or solo work
•   Highest frequency / lowest severity
     Midsize Firm Characteristics
•   4 - 15 attorneys
•   Constantly changing partners
•   AOP Spread is broad
•   Mid range Limits/Deductible (1M - 3M)
•   Need coverage for financial protection
•   Lower frequency, but still very high / higher
    Large Firm Characteristics
• 16 - 100 attorneys
• Broad AOP split / some multiple locations
• Higher Limits/Mid-range Deductibles -
• Underlying risk curve more severe
• Constant change, but less impact at this size
• Lower frequency / severity is more of an
    Jumbo Firm Characteristics
• 100+ attorneys
• Broad AOP split / multi-location / some
• High Limits/SIRs
• Severity is the key issue
• Firms are unlikely to get full limits from
  one carrier - Line Slips and Excess common
• High Verdicts- Philadelphia, Las Vegas,
  New York City, Texas, Mississippi
• “Small town” attorneys/fear of publicity
• Uncharted waters/emerging areas- South
  Dakota, Iowa, Idaho

•   Insured was retained to prosecute an underlying medical malpractice
    case seeking damages for a catastrophic injury sustained by James
    Jones as a result of an anesthesia mishap during an operation. The
    insured represented James Jones, his wife (Linda Jones) and their
    minor child, Rachel. At the time of the suit, Linda was James’s
    personal representative and guardian. James was left without any
    cognitive functions and is unaware of his surroundings. The Insured
    obtained a settlement in the total amount of $17,034,000. This was the
    highest recorded settlement involving a personal injury case ever
    recorded in the state. Subsequent to the settlement James’s parents
    assumed guardianship of James from Linda. The parents (on behalf of
    James) assert that the insured had a conflict of interest in representing
    both James and his wife child. In sum, they assert that James did not
    get his fair share of the settlement. They assert that James should
    have received 80% of the total settlement rather than the 14% he
Area of Practice
Top 5 AOPs by Claim Count (ABA)

•   Personal Injury - Plaintiff
•   Real Estate
•   Family Law
•   Estate, Trust and Probate
•   Corporate/Business Organization
           Lower Risk AOPs

• Criminal - Low frequency and severity
• Defense - Low frequency / can be high
  severity - changing?
• Business Transactions - Low frequency /
  can be high severity - watch for trends
• Civil Rights
          Medium Risk AOPs

• Family Law - not impacted by trends much
• Tax
• Wills, Estate - can be high severity / low
  frequency - changes in law can impact
• Collections & Bankruptcy - traditionally
  lower risk, but high severity has pushed this
  up - very impacted by economy
            Higher Risk AOPs

• Plaintiff - Personal Injury - high frequency /
  medium severity
• Plaintiff - Med Mal - high severity due to
  underlying cases - watch for trends
• Real Estate - Commercial and Residential
• Banking
• Intellectual Property
• Securities
Top 8 AOP’s - claims excess of $1M

• Bodily                 •   Commercial
  Injury/Medical         •   Labor Law
  Malpractice            •   Securities
• Patent/Copyright/      •   Environmental
• Estates/Trusts/Wills
• Real Estate
         10 AOPs By Severity

• Securities Law    • Litigation
• PI Plaintiff        (excluding criminal
• Corporate           and insurance
  Formation           defense)
• Commercial        • Insurance Defense
  Practice          • Bankruptcy
• Estate, Trust &   • Real Estate
     Coverage Issues - Claims
• Prior knowledge
• Claims made/reported within the policy
• Fraud in the application
• Professional services
• Criminal/fraudulent/dishonest/intentional
 Coverage Issues - Underwriting
• Soft market has created higher limits than
  needed / Deductibles not keeping pace
• Choice of Counsel
• Pre-Claims assistance provisions
• Innocent Partner Coverage
• Predecessor Firm Coverage
Emerging Issues
              Emerging Issues

•   Fee Suits
•   Substance Abuse (true clash potential)
•   Economic Issues
•   Bankruptcies
•   Sarbanes-Oxley
•   Multi-Disciplinary Practices

Christopher Troisi, Zurich North America
Denise Olson, CNA Insurance
           September 19, 2002

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