By Tim Clarke – General Claims Counsel
I have spent most of my 25 years as a lawyer working for or with professional liability insurance programs mandated by self-regulated professions. The roles of the regulator and insurer are quite distinct but should be complimentary.
The regulatory authority has a duty to administer the profession in the public interest. As part of that role, the professional regulator will not only set down ethical standards and discipline process but will, frequently, require its practicing members to carry insurance from a designated or captive professional liability (malpractice) insurer. The policy reasoning behind the requirement of insurance is to ensure that members of the public who suffer economic loss because of an error or omission by a professional will be compensated.
Designating a compulsory or captive insurer also ensures that all members of the profession have uniform malpractice insurance coverage. Including all members of a profession in a single program increases the risk pool for insurers which allows all professionals access to affordable coverage. Having a single insurer also ensures that claims made are handled consistently.
At law, insurers and insureds owe each other a duty of the utmost good faith. The regulator’s first duty is to the public but the insurer’s first duty is to the insured professional. These duties do not have to be mutually exclusive. As claims managers, by dealing with claims on a principled basis, we help the regulator fulfill its public protection imperative. Justifiable claims by clients who have suffered harm at the hands of a professional should be paid as efficiently and expeditiously as possible. An insurer is not a protective association, “stonewalling” legitimate claimants is not its function. Equally, an insurer should not be capricious in how it extends coverage. In my view, a compulsory insurer’s job is to look for not to deny coverage.
None of this is to say that a compulsory insurer should compromise the defence of an insured for the sake of expedience. Not all claims are created equal. A professional’s reputation is possibly their most important asset. We see a great many unmeritorious claims against our insureds and take an assault on a professional’s reputation very seriously. While there are many lawyers in Ontario, the insurance litigation bar is relatively small. We see the same plaintiff’s counsel again and again. While we strive to resolve meritorious claims as quickly as possible, we do try to send the message that there is no profit to be had in bringing a groundless law suit against one of our insureds. Where an unmeritorious claim is made against a professional, the professional should be able to expect the insurer to stand up for them.