Committee on Lawyer Malpractice Insurance

David D. Hudgins, chair

ALPS RRG (Attorneys Liability Protection Society Inc., A Risk Retention Group) is the VSB’s endorsed professional liability insurance carrier.  The Special Committee on Lawyer Malpractice Insurance (LMI Committee) continued its overview of ALPS’s risk management endeavors during FY2014. 

One of the missions of the LMI Committee is to monitor and evaluate the market for lawyer malpractice insurance in Virginia and make recommendations from time to time to the Executive Committee and council as to whether the VSB should endorse a particular underwriter of such insurance, and, if so, on what terms and conditions. ALPS has been the VSB's endorsed lawyers' professional liability carrier since October 2000.  As established by the committee in October 2008, one of its five-year goals was to re-evaluate its endorsement of ALPS or whether it should endorse any malpractice carrier. In June of 2013, the committee decided to hire a consultant to assist in its evaluation of the ALPS endorsement. The LMI Committee issued a request for proposals in the summer of 2013 for a consultant to assist it in review of the bar's endorsement of ALPS.   

Bickmore, a California company, was chosen to undertake the study.  Bickmore submitted its report on February 25, 2014.  The report was submitted to the Special Committee on Lawyer Malpractice Insurance and was considered at its meeting on March 17, 2014.  The report was positive in its findings regarding ALPS and recommended that the endorsement relationship be continued.  The LMI Committee accepted the Bickmore report and made a report to council at its June 2014 meeting about the findings.  The report in its totality can be found on the VSB website at  http://www.vsb.org/site/news/item/alps-reaffirmed-2014.

On September 1, 2013, the committee learned that Wendy Inge, the Virginia dedicated risk manager, had tendered her resignation.  Mark Bassingthwaite, the ALPS national risk manager, assumed her duties and responsibilities with assistance from a risk management coordinator. 

On the risk management front, ALPS contributed 3 percent of its Virginia gross written premium in FY2014, or $270,099, to support a variety of VSB risk management activities.  Those dollars supported the ALPS Fall VSB‐ALPS Ethics and Professionalism program which drew 1,496 attendees.  Virginia attorneys earned three hours of CLE ethics credit.  The risk management budget also supported a Risk Management Hotline, ten live webinars, programs uploaded into a Virginia on-demand library, risk management seminars with Virginia local, county and specialty bars, a Substantive Law CLE Series and the contribution of $30,000 to Virginia's Lawyers Helping Lawyers.

Pursuant to the endorsement agreement, ALPS sought the LMI Committee’s advisory input to proposed changes to its policy form.  Two changes were determined to be potentially disadvantageous to Virginia lawyers.  The first, which permitted the company the right to require a statement of the insured under oath, was eliminated in Virginia via a state amendatory endorsement.  The second, which provided ALPS a right to seek reimbursement for amounts paid in defending non-covered claims, was kept in the policy although ALPS agreed to provide the LMI Committee an annual report on any instances when the policy language had been invoked.  Recently, ALPS notified the LMI Committee of its intent in its next national form filing (June 2014) to eliminate both provisions entirely from the ALPS policy form, not only in Virginia but all states where ALPS does business.    

As of June 30, 2014, 3,714 Virginia lawyers were insured by ALPS in 1,827 firms.  As of June 30, 2013, 3,720 Virginia lawyers were insured by ALPS in 1,930 firms. As of June 30, 2012, 3,648 Virginia lawyers were insured by ALPS in 1,888 firms.  As of June 30, 2011, 3,568 Virginia lawyers were insured by ALPS in 1,847 firms.

At its meetings held on September 26, 2013, December 10, 2013, February 26, 2014, and May 6, 2014, the LMI Committee continued to focus on monitoring ALPS performance; increasing the committee members’ knowledge in the LPL arena; reviewing and commenting on changes to policy forms; and targeting the risk management budget toward educational topics to decrease liability for Virginia lawyers. 

In 2013 year-end results, ALPS reported a net combined ratio of 99.17 percent overall with the Virginia book at 63.27 percent.  Of its total 13,616 insureds, 3,756 were Virginia attorneys as of 12/31/2013.  Claims frequency in 2013 was 3.27 percent in Virginia, compared to 3.82 percent overall.  Gross written premium from the Virginia book was $9,457,831, and overall was $42,190,661.  Net written premium from Virginia was $6,294,297, and overall was $28,078,379.

Throughout 2013 and the first half of 2014, ALPS continued to move forward with plans to relinquish its Risk Retention Group status and become an admitted carrier in all states in which it does business, achieving that goal in all states except Virginia.  In consultation with the Virginia State Corporation Commission, it withdrew its Virginia application in February 2013, but refiled the application after the completion of a triennial financial examination.  As of the date of this report, the SCC had not ruled on ALPS’ Virginia application. The LMI Committee wrote a letter in December 2013 to the SCC urging acceptance of ALPS application, because acceptance of ALPS as an admitted carrier in Virginia would inure to the benefit of Virginia's ALPS-insured lawyers. ALPS would be subject to SCC regulation and, in the event of insolvency, ALPS insureds would have access to the Virginia Guarantee Fund.             

Updated: Jul 01, 2014