Professional Liability Insurance & the AIBC – One Year Countdown until February 1, 2019
On May 2, 2015, members approved a motion from the floor at the AIBC Annual Meeting “that council be requested to consider mandatory PLI for all members and registrants in practice.” Council confirmed its support for the motion in July 2015, and so began a multi-year process whereby the Institute would pursue Professional Liability Insurance (PLI) on the basis that it would be required, and tied to an architect’s Certificate of Practice (CoP).
Over the past two years, through the Bylaw Review Committee, a working group was convened, consultation sessions were held, and feedback was solicited. These initiatives culminated in a record-breaking member vote with more than 80 per cent of voters in support of the new insurance bylaws.
At the end of August 2017, the PLI Bylaws successfully passed the provincial government’s disallowance period and are now in effect, with compliance not required until the February 1, 2019 annual renewal deadline.
This Regulatory Review article is intended to provide readers with a refresher on PLI in relation to the AIBC, as well as provide information on what to expect before compliance with the bylaws become mandatory on February 1, 2019.
What is PLI?
Professional liability insurance provides protection to the public through financial remedies for claims. It is a form of insurance that also protects architects against claims by clients and third parties. It is sometimes referred to as “errors and omissions” insurance, and is intended to provide protection necessary to defend and settle claims arising out of design services, field review and other services provided by architects.
What are basic coverage premiums?
As a starting point, basic coverage premiums for small firms with one to three architects are in the $1,000–$2,500 range per year. Premiums are a business expense. Deductibles vary with the policy and generally can be negotiated through the broker. It is a competitive business. Architects are encouraged to seek quotes from multiple brokers, and then determine which proposal offers the most appropriate coverage.
Insurance coverage is provided on a ‘claims-made’ basis- the insurance policy must be in force at the time the claim is made (or reported) for coverage. Policies may be available that cover work back to the commencement of a firm’s operation, or for work done by predecessor firms.
Why “mandatory” and not “compulsory”?
‘Mandatory’ PLI, which allows purchasers to obtain insurance coverage from the commercial insurance market, is seen as providing the broadest range of options, for AIBC members. In some jurisdictions, such as Ontario, ‘compulsory’ PLI (also known as a ‘captive’ insurance) is offered through a single provider which is directly operated or overseen by the regulator. This option was not proposed to AIBC members, as it would require additional government approvals, and given the limited number of AIBC Certificate of Practice holders, the costs and risks were considered too high for the Institute.
Current AIBC Landscape
As part of the annual renewal cycle, as required by Bylaw 15.4, firms complete a Firm Information Update to keep information current and help maintain the integrity of the AIBC Register. This year, the 2017 Firm Information Update included several questions regarding Professional Liability Insurance.
The AIBC is pleased to share that the majority of firms in British Columbia already have PLI. Preliminary data suggests that out of the firms who responded, close to 600 certificate of practice holders reported having PLI. Fewer than 125 reported that they did not have coverage.
- Council Rules 8: Terms and Conditions for Mandatory Professional Liability Insurance
The approved bylaws allow AIBC Council to establish rules about insurance amounts, coverage and other aspects of the mandatory PLI requirement. The expected minimum amount of PLI coverage would be $250,000 per claim, with an annual aggregate limit of not less than $500,000. Review the proposed Council Rules 8: Terms and Conditions for Mandatory Professional Liability Insurance (PLI). Council Rules 8 continue to establish minimum insurance amounts, coverage and the mechanism by which evidence of insurance is provided. In addition, the rules now contain refined procedural requirements and consequences for non-compliance.The notification period for Council Rules 8 opened on January 18 and will run until February 22, 5 p.m. During the notification period, members and associates are invited to share their feedback or questions through an online feedback form. All feedback (without identifying information) is provided to council prior to its consideration and vote on the rules. Council is expected to vote on these rules in March.On March 19, 2018, AIBC Council approved Council Rules 8: Terms and Conditions for Mandatory Professional Liability Insurance (PLI). They are now in effect.
- Select the coverage appropriate for your firm
Though the PLI Bylaws are currently in effect, firms will have until February 1, 2019, to become compliant. This now 12-month lead time allows for members to research and select the appropriate coverage for their practice, or make decisions on changing that practice.
Members are welcome to contact the AIBC with any specific questions or concerns regarding professional liability insurance by emailing firstname.lastname@example.org.
Please email email@example.com if you have any questions.
Issues of AIBC Regulatory Review will be published on a regular basis, announced via Connected and archived on the AIBC website.