As directed by the governing board of the mandatory indemnity program for Alberta lawyers (the “Program”) an Enhanced Surcharge Protocol for the Program is being 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.
What is changing?
Under the current Surcharge Protocol, which has been in place since 1985, lawyers who have multiple paid claims for damages against them incur 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.
The Enhanced Surcharge Protocol applies to claims that are reported on or after July 1, 2019 and will have no impact on lawyers with existing claims or paid claims before July 1, 2019, unless they have a subsequent claim on or after July 1, 2019 that results in a payment of damages or repairs.
As the Enhanced Surcharge Protocol applies effective July 1, 2019, the first surcharges assessed under the Enhanced Surcharge Protocol will be made in May 2020 for the policy year commencing July 1, 2020.
Why is it changing?
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 of at (403) 229-4716 or toll free 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.