The last Hurrah! In my final year as Chair of the Board of the Liability Claims Fund, I am pleased to report another decrease in the annual insurance levy. This is our fourth in a row. The full practicing levy for 2002-03 is $772, a reduction of $128 from last year’s levy of $900 and a far cry from the high water mark of $2700. This year’s reduction was achieved through the continuation of our favourable claims experience and an application of substantial surplus credits.

Our actuaries advise us that the true levy necessary to meet our expected liabilities in the coming year would be $1935 per member, more than two and a half times the levy being charged to members net of credits. Since we are gradually depleting our surplus, we can expect the levy to increase over time. However, if we have a reasonably stable loss experience, we expect to be able to hold our annual levy below $1000 for some years to come.

In the past, we have received significant credits from CLIA (Canadian Lawyers Insurance Association) who provide our coverage from $300,000 to $1,000,000 per claim. This year, we have a very modest credit from CLIA and a substantially increased credit from the Liability Claims Fund. This is a result of an important change to the CLIA reciprocal rules effective January 1, 2002.

The CLIA insurance premium for the mandatory insurance above our group deductible is based on CLIA’s best estimate of the amount of premium required to meet expected losses. In the past, paid premiums which were not used to meet our losses were held by CLIA in Nova Scotia’s subscribers’ equity account. There was no provision for repayment of these funds while Nova Scotia remained a member of CLIA. In recent years, as our claims experience improved, the balance in our subscribers’ equity account had increased substantially, and had done so disproportionately to other CLIA subscribers.

Last year, our Board asked CLIA to review the reciprocal rules relating to subscribers’ equity and provide a method for fair return of surplus equity. As a result of this request, the CLIA Advisory Board changed the rules and now allows each jurisdiction to withdraw their equity in excess of a predetermined threshold, while also continuing to permit retro-calls to be levied against subscribers whose equity falls below the required level.
All CLIA jurisdictions were given the option to withdraw their excess equity from CLIA effective July 2, 2002. Your Liability Claims Fund Board has approved the withdrawal from CLIA of subscribers’ equity of approximately $2.2 million. It is this $2.2 million that has allowed us to increase the credit being offered by the Liability Claims Fund to each insured member. Nonetheless, we retain our full required level of subscribers equity in CLIA along with a small surplus which is the source of our CLIA credit in the amount of $64 per member this year.

The Liability Claims Fund is committed to managing your funds cautiously. It is applying the surplus in a gradual manner and is investing the moneys conservatively under the watchful eye our Investment Committee.

The Liability Claims Fund Board has decided to conclude its Loss Prevention certificate programme. While this programme has been very well received by many, only about 1/3 of our members actually use their Loss Prevention Certificates. Moreover, after a detailed review of the objectives of the Loss Prevention program, it was determined that these objectives were not being met in the best possible fashion through the Loss Prevention Certificate programme. The Board has redirected its efforts and is committed to developing a new Loss Prevention programme. Staff and committee members are now working together to develop the programme. Approval has been given to develop a web site to facilitate the delivery of Loss Prevention information and resources to the membership. Work has also begun with the NSBS Admissions and Professional Development Department to develop loss prevention education programmes geared specifically to the reduction of the frequency and severity of claims.

While we should all enjoy this period of relatively low insurance premiums, we must be conscious that claim occurrences are cyclical in nature. I believe that we are at the end of a positive cycle and can expect some increases in the coming years. We can keep new claims to a minimum if we practice carefully and attentively with an eye on claims avoidance.

Chair: John T. Rafferty

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