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Attorney Asks:

Why did the attorney malpractice premium not go down at renewal?  I decided to switch to all criminal work which I know is a lower risk area of practice, but the renewal application only wants to know what was done in the past year.  I told carrier that I want the practice areas changed to criminal anyway.  I want a lower rate this year.

Response:

The Lawyers Professional Liability Insurance renewal application is meant to capture what was done on retrospective basis.  Attorney malpractice insurance is written on a claims-made policy form.  Your renewal claims-made malpractice policy not only covers acts that occur in the current year, but covered acts that occurred in the past.  That is why it is important to maintain your prior acts date.  Most attorney malpractice claims are reported for acts that occurred in prior policy years.  The claims-made policy form is designed to handle these claims.  The claims-made policy inforce at the time the claim was made is the policy that will cover the claim.  Many people get confused with occurrence policy forms.

If attorney malpractice insurance policies were written on an occurrence policy form, then changing the areas of practice in the current year and having the rates change at the same time would make sense.  As then the current areas of practice would reflect the future exposure of reported claims as claims would be covered by when the act occurred, not when the claim was reported.

Given the retrospective nature of the claims-made malpractice coverage, rating the firm for what it has done in the past, not want it plans to do more accurately reflects the exposure.  This can be frustrating to many an attorney that is expecting an immediate change in the premium insurance cost

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