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  • Enhanced Surcharge Protocol
  • Enhanced Surcharge Protocol: FAQs
Enhanced Surcharge Protocol: FAQs

What is a surcharge?

A surcharge is a professional liability assessment levied on Participating lawyers who have had repairs or damages paid on Part A claims. The surcharge is payable in addition to the annual base levy. The assessment is approved by the governing board of the mandatory indemnity program for Alberta Lawyers (the “Program”).

To review the Enhanced Surcharge Protocol in its entirety, click here.

Why did ALIA enhance the current 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 was rolled out effective July 1, 2019.

The Enhanced Surcharge Protocol will benefit 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.

When did the Enhanced Surcharge Protocol come into effect?

The Enhanced Surcharge Protocol was effective July 1, 2019.

What changed as a result of the Enhanced Surcharge Protocol?

The Enhanced Surcharge Protocol shifts more responsibility to insured lawyers who have multiple claims. This is done by moving away from a percentage-based surcharge to a fixed amount that escalates with the number of paid claims for damages or repairs, without a cap. The Enhanced Surcharge Protocol keeps a “free paid claim”; however, it has been reduced from $10,000 net of deductible to $5,000 net of deductible.

What does not change:

A surcharge will not result if only defence costs were paid; if the claim is covered by the Western Law Societies’ Conveyancing Protocol and the participating lawyer fully complied with the requirements of that Protocol; or, if the claim qualifies as a “free paid claim” as stated in the Enhanced Surcharge Protocol or if the participating lawyer buys the claim down.

To read the Enhanced Surcharge Protocol, click here.

How can a participating lawyer reduce their surcharge? Is there a buy-back option?

ALIA offers an option to “buy back” the costs of paid claims.

A paid claim can be bought back at any time; however, in order for us to make adjustments to your levy invoice it needs to be done within ten (10) business days following the date on which the surcharge is invoiced for the policy year. Otherwise; adjustments will not be made until the following policy year invoice.

For full details, please read the Enhanced Surcharge Protocol here.

Please contact ALIA directly to discuss this option:

alia@lawsociety.ab.ca
403.229.4716 or toll free 1.800.661.1694

Are all claims subject to a surcharge?

No. A surcharge will not result if only defence costs were paid; if the claim is covered by the Western Law Societies’ Conveyancing Protocol and the participating lawyer fully complied with the requirements of that Protocol; or, if the claim qualifies as a “free paid claim” as stated in the Enhanced Surcharge Protocol or if the participating lawyer buys the claim down.

To read the Enhanced Surcharge Protocol, click here.
To review a flowchart of the Enhanced Surcharge Protocol, click here.

What triggers a surcharge on a claim?

A surcharge is triggered on a “paid claim”. For the definition of “paid claim” please click here.

A surcharge will not result if only defence costs were paid; if the claim is covered by the Western Law Societies’ Conveyancing Protocol and the participating lawyer fully complied with the requirements of that Protocol; or, if the claim qualifies as a “free paid claim” as stated in the Enhanced Surcharge Protocol or if the participating lawyer buys the claim down.

For the definition of “damages”, “repairs” and “defence costs”, please click here.

What is a “free paid claim”?

The Enhanced Surcharge Protocol states a” Free Paid Claim” as:

A Paid Claim shall not result in a Surcharge for a Subject Year if:

  1. payments in respect of the underlying Claim, at the time the applicable Surcharges are calculated, are for no more than $5,000 of Damages, net of the Individual Deductible; and
  2. the Paid Claim is the oldest Paid Claim (including, for greater certainty, Prior Paid Claims) of the Individual Insured within the five consecutive Policy Years preceding the Subject Year.

For greater certainty, Paid Claims shall be accounted for on a trailing basis to determine whether they shall continue to result in a Surcharge.

What is a “paid claim” under the Enhanced Surcharge Protocol?

A “paid claim” means a payment or payments for damages or repairs made in respect of a claim. Damages or repairs are normally paid when ALIA either incurs costs to correct an error or settles a claim with a claimant on a participating lawyer’s behalf.

A surcharge will not result if only defence costs were paid; if the claim is covered by the Western Law Societies’ Conveyancing Protocol and the participating lawyer fully complied with the requirements of that Protocol; or, if the claim qualifies as a “free paid claim” as stated in the Enhanced Surcharge Protocol or if the participating lawyer buys the claim down.

For the definition of “damages”, “repairs” and “defence costs”, please click here.

If a participating lawyer reports a claim and nothing is paid on the claim, will the claim be subject to a surcharge?

No.

How long does a surcharge last?

The surcharge applies for five consecutive practice years.

If a total paid claim is within the deductible, will the claim be subject to a surcharge?

No.

If a participating lawyer reports a claim and ALIA successfully repairs the claim, will the claim be subject to a surcharge?

Yes. Repairs are defined as damages in the group policy. The group policy can be read here.

If a participating lawyer is already paying a surcharge, will this change? How does the grandfather clause work?

All claims reported prior to July 1, 2019, are grandfathered under the previous Surcharge Protocol, which will not change unless a participating lawyer 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 participating lawyer 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, will automatically roll into the Enhanced Surcharge Protocol for their remaining period.

For example: If a participating lawyer 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.

ALIA is offering participating lawyers the ability to “buy back” a claim. Participating lawyers who wish to explore this option can contact ALIA:

Email: alia@lawsociety.ab.ca
Call 403.229.4716 or toll free 1.800.661.1694

A paid claim can be bought back at any time; however, in order for us to make adjustments to your levy invoice it needs to be done within ten (10) business days following the date on which the surcharge is invoiced for the policy year; otherwise; adjustments will not be made until the following policy year invoice.

To review the “buy-back” provisions of the Enhanced Surcharge Protocol, please click here.

What are repair costs, defence costs and damages?

Please note this summary is provided for information purposes only. The exact definitions are provided in the group policy and can be read here.

Damages are generally damages suffered by the claimant subject to certain exclusions in the Policy. The definition of damages also includes repair costs.

Repair costs are those costs incurred to attempt to correct an error to prevent a claim from being advanced (i.e. legal costs paid to repair counsel).

Defence costs are those costs incurred by ALIA in defending or settling a claim (i.e. legal costs paid to defence counsel).

Can the surcharge be waived for special circumstances?

The Enhanced Surcharge Protocol is expected to assist with offsetting some of the costs of claims and will reduce what the levy would otherwise have been; however, the levy is determined by a number of factors. These factors include, among other things, the costs of claims from the previous year, the number of claims expected and the costs attributed to them.

Will the Enhanced Surcharge Protocol reduce the levy?

The Enhanced Surcharge Protocol is expected to assist with offsetting some of the costs of claims and will reduce what the levy would otherwise have been; however, the levy is determined by a number of factors. These factors include, among other things, the costs of claims from the previous year, the number of claims expected and the costs attributed to them.

Will the Enhanced Surcharge Protocol change the deductible?

The deductible will remain at a maximum of $5,000 per claim.

Who can a participating lawyer call if they have questions about the Enhanced Surcharge Protocol?

For questions about the Enhanced Surcharge Protocol, participating lawyers can speak to an ALIA representative by contacting ALIA directly:

alia@lawsociety.ab.ca
403.229.4716 or toll free 1.800.661.1694

Who can a participating lawyer call if they have questions about what claims have triggered a surcharge?

For questions about what claims have triggered a surcharge, please speak to an ALIA representative by contacting ALIA directly:

alia@lawsociety.ab.ca
403.229.4716 or toll free 1.800.661.1694

How can participating lawyers find out how much they owe for the surcharge?

Lawyers can find information as to how much they owe for the surcharge under the levy invoice located under the fee billing history in the Lawyer Portal.

What are the methods for paying the surcharge?

Please click here for information on methods for making payments to ALIA.

Can a participating lawyer be suspended for not paying the surcharge?

Yes. As per The Rules of the Law Society of Alberta, failure to pay an assessment can result in administrative suspension. Rule 165(3) states the lawyer will stand suspended for indemnity program assessments.

What if a participating lawyer cannot log into the Lawyer Portal?

Please contact the Law Society of Alberta’s customer service team for any queries related to the Lawyer Portal:

403.229.4700 or Toll-free 1.800.661.9003
membership@lawsociety.ab.ca

When should a claim be reported?

The group policy, as a condition of coverage, requires participating lawyers to report any claim or potential claim against them to ALIA as soon as they become aware of it. Failure to report a claim or potential claim prior to the June 30 deadline of the policy year in which a participating lawyer becomes aware of it will result in denied coverage. To report a claim, please submit an Insurance Claim Report.

 

Printed from https://www.lawsociety.ab.ca on February 05, 2023 at 1:00:55 AM
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