Jump to: Surcharge FAQs
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 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.
View the Enhanced Surcharge ProtocolWhat changed?
Under the previous Surcharge Protocol, which was 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 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 FAQs. 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 FAQs, 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.
Enhanced Surcharge Protocol: FAQs
A surcharge is a professional liability assessment levied on Subscribers 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.
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.
The Enhanced Surcharge Protocol was effective July 1, 2019.
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 Subscriber 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 Subscriber buys the claim down.
To read the Enhanced Surcharge Protocol, click here.
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
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 Subscriber 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 Subscriber buys the claim down.
To read the Enhanced Surcharge Protocol, click here.
To review a flowchart of the Enhanced Surcharge Protocol, click here.
A surcharge is triggered on a “paid claim”. For the definition of “paid claim” please click here to review the Enhanced Surcharge Protocol.
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 Subscriber 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 Subscriber buys the claim down.
For the definition of “damages”, “repairs” and “defence costs”, please click here to review the current Group Policy.
The Enhanced Surcharge Protocol states a” Free Paid Claim” as:
A Paid Claim shall not result in a Surcharge for a Subject Year if:
- 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
- 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.
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 Subscriber’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 Subscriber 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 Subscriber buys the claim down.
For the definition of “damages”, “repairs” and “defence costs”, please click here to review the current Group Policy.
No.
The surcharge applies for five consecutive practice years.
No.
Yes. Repairs are defined as damages in the group policy. The group policy can be read here.
All claims reported prior to July 1, 2019, are grandfathered under the previous Surcharge Protocol, which will not change unless a 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, will 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.
ALIA is offering Subscribers the ability to “buy back” a claim. Subscribers 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.
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).
The President and CEO of ALIA may waive the payment of the Enhanced Surcharge Protocol with approval of the Program’s Claims Committee. Any consideration for a waiver must be in writing by the member with supporting reasons as to why a waiver should be considered.
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.
The deductible will remain at a maximum of $5,000 per claim.
For questions about the Enhanced Surcharge Protocol, Subscribers can speak to an ALIA representative by contacting ALIA directly:
alia@lawsociety.ab.ca
403.229.4716 or toll free 1.800.661.1694
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
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.
Please click here for information on methods for making payments to ALIA.
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.
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
The group policy, as a condition of coverage, requires Subscribers 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 Subscriber becomes aware of it will result in denied coverage.
To report a claim, please submit an indemnity claim report.