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- Enhanced Surcharge Protocol
As directed by the governing board of the mandatory indemnity program for Alberta lawyers (the “Program”) an Enhanced Surcharge Protocol for the Program is effective as of July 1, 2019.
The Enhanced Surcharge Protocol benefits a large majority of Alberta’s private practice lawyers by shifting more of the costs of multiple paid claims onto the relatively few lawyers who incur them. These changes will also help offset the increasing costs of defending and resolving claims.
What changed?
Under the previous Surcharge Protocol, which was in place since 1985, lawyers who had multiple paid claims for damages against them incurred surcharges to a maximum of three times the current annual base levy assessment for the Program. The Enhanced Surcharge Protocol uses a fixed amount that escalates with the number of paid claims for damages, without a cap.
All claims reported prior to July 1, 2019, are grandfathered under the previous Surcharge Protocol until June 30, 2024. Grandfathered claims remain at the previous surcharge rates unless the Subscriber sustains a new paid claim reported on or after July 1, 2019; that is, a claim reported on or after July 1, 2019, in respect of which a payment of damages or repairs is made. Should a Subscriber have a new paid claim reported on or after July 1, 2019, then their existing claim(s) that occurred before July 1, 2019, along with the new paid claim, automatically roll into the Enhanced Surcharge Protocol for their remaining period.
For example: If a Subscriber currently has an existing claim being surcharged and they have another claim reported and damages or repairs are paid after July 1, 2019, they will now be surcharged under the Enhanced Surcharge Protocol as having two claims.
Grandfathering ends June 30, 2024. Any surcharge owed at the time ALIA invoices Subscribers for the 2024-2024 indemnity Policy Year will be charged under the Enhanced Surcharge Protocol, regardless of when the claim was originally reported.
Why change?
Throughout the comprehensive process ALIA undertook to update and enhance the Surcharge Protocol, a top-of-mind consideration was that a very small percentage of Alberta’s private practice lawyers – 1.6 per cent with multiple paid claims – were responsible for more than 16 per cent of the Program’s indemnity payouts, which is a highly disproportionate weighting. The changes to the Enhanced Surcharge Protocol reflect commonly accepted insurance practices that reward members who have exemplary no-claim records of legal practice, while shifting more costs to those who have incurred multiple paid claims.
Enhancements to the Surcharge Protocol were the result of examining best practices in other jurisdictions and firmly committing to control costs by incentivizing competency in legal practice while promoting proportional fairness.
In recognition of the fact that Alberta’s private practice lawyers may, from time to time, be faced with a claim for which they are not liable, the Enhanced Surcharge Protocol will not apply to claims where only defence costs are paid. Notwithstanding competent practice, errors can happen; as such, the Enhanced Surcharge Protocol contains a “free paid claim” provision.
Find out more
Lawyers are encouraged to read the Enhanced Surcharge Protocol in its entirety, as well as the FAQ. If lawyers require further information, they should not hesitate to contact ALIA via email or by calling Customer Service during ALIA’s business hours at (403) 229-4716 or toll free at 1-800-661-1694.
The summary of the Enhanced Surcharge Protocol contained above, the FAQ, and any infographic or flowchart or any other linked information is provided for information purposes only and not as legal advice and is qualified in its entirety to the terms and conditions of the Enhanced Surcharge Protocol.