MPR offers a financial lines package policy to protect the assets of barristers, chambers and service companies (where required) against the risks associated with their operational environment.
Protection of the assets of the barristers, along with other organisations and managers within the structure is vital within a challenging operating environment. The Management Risks Insurance package policy is an integrated solution and provides four important sections of cover, each with its own limit. This delivers a quick and easy to place solution for barristers and service companies.
Why do your clients need Management Risks Insurance?
- Barristers, partners, members, directors, officers and senior managers can be exposed to a broad spectrum of risks. Specialist lawyers do not come cheap and hourly rates can be many hundreds of pounds.
- Good human resources practices can go a long way to mitigate exposures to claims by employees but cannot eliminate them completely.
- Although a chambers has no separate legal personality, the service company attract liability.
- According to the Association of Certified Fraud Examiners, the average organisation loses about 6% of its total annual revenue to fraud and abuse committed by its own employees.
What does the policy cover?
A comprehensive package policy providing cover for:
- Associates, partners, members, directors and officers insurance;
- Employment practices insurance;
- Association insurance;
- Employee Crime, Crime using Computers and Social Engineering Crime.
What limits are available?
Your clients can choose the limits they need for each area of exposure as each section has a separate limit.
What does an underwriter like to see?
- Comprehensive and robust risk management strategies.
- Organisations with good checks and controls in place, such as:
- HR background checks and reference procedures;
- written policies on discrimination, harassment, discipline and termination;
- call back procedures for phone transfer requests;
- structured procedures around bank account changes;
dual controls
.
Is there anything an underwriter wouldn’t insure?
- Newly established chambers may need more focus to get a better understanding of the dynamics and risk profile.
- The policy contains exclusions to remove disputes that are not in the scope of this kind of insurance. These include professional liability and disputes over constitutional issues.
- Whatever the risk, underwriters will always try to find solutions, even if the policy terms may be more cautious and reflective of the risk characteristics.
Key Features
- Comprehensive cover
- Management liability insurance for barristers chambers has never been as widely available as it has been for incorporated organisations. This policy delivers a strong solution across a range of exposures that barristers chambers face and integrates cover for any associated service companies.
- Important cover for the association itself
- The cover provided by this section can provide valuable protection in many areas and defence costs for a number of scenarios for the service company.
What can go wrong?
The operational environment continues to pose existing and new challenges for organisations.
Barristers are subject to many of the new and existing laws, which make no distinction between incorporated and unincorporated organisations. Development of themes such as social engineering fraud, put assets at risk on a daily basis.
Employment practice claims are on the increase and can be time consuming and expensive.
Typically, defending a straightforward Employment Tribunal claim can cost anything between £8,000 and £12,000. For a more complex claim, say one that includes discrimination, these costs can quite easily rise above £20,000. Although fair and reasonable employers which have proper procedures in place will face more limited exposure to tribunal claims, employment practices liability cover helps for unexpected claims that may be brought.
A supplier to a law firm notified irregularities in respect of a member of staff. An internal investigation followed and confirmed that the employee was receiving irregular and unauthorised commission payments from some of the suppliers to the firm, all of whom he had introduced. The employee was making arrangements with some of these suppliers to inflate their invoices in order to maximise his ‘commissions’, as well as putting in place arrangements for work to be done by these suppliers for other organisations, which were connected to the same employee. The loss to the firm from these payments exceeded £160,000.
Supplier and vendor fraud, including ‘ghost’ companies, are major sources of employee fraud. A straightforward controls framework around appointment of new suppliers would have extinguished the opportunity to perpetrate the fraud, and dual controls would have also mitigated the effects. Left unchecked over a period of year, overcharging for services rendered and charging for services that were never performed accrued to a significant and meaningful amount.
Regulatory bodies represent a growing risk to all organisations.
It is helpful to know that, if the worst happens, there is a product specifically crafted to accommodate the consequences of these unforeseen and undesirable events. Regulatory investigations can be stressful and difficult and will carry a cost. Having a policy written around the barristers structure has the potential to deliver a meaningful benefit.
