Chartered Accountants Carry the Torch - The Institute of Chartered ...

Always Read the Fine Print in Your Insurance
Policy
Have you ever signed a contract only to find
out months later that you didn’t get everything
that you thought you were getting? This can be
the case when you are purchasing professional
liability insurance (PLI) for your accounting
practice.
In order to protect the public, your Institute
requires that all public accounting firms
carry professional liability insurance with the
following minimum PLI limits:
• $1 million where one member practises
public accounting;
• $1.5 million where two or three members
practise public accounting;
• $2 million where four or more members
practise public accounting.
PLI is required to pay out awards to an
injured party in the event that the member or
firm has been found to be at fault.
It is important that members and firms
carefully review all of the provisions on the
insurance contract to be certain that it provides
you with the coverage you require. Some of the
inconsistencies that we have noticed include the
following examples:
1. If the limit of the liability includes defense
costs it could mean that a good portion, if
not all, of the insurance could be used to
pay the defense costs of the claim rather
than being used to pay out an award to the
injured party. This is not consistent with the
minimum PLI requirements and would leave
you exposed for any shortfall.
2. An insurance provider may decide to exclude
certain high risks clients such as public
companies from coverage by your insurance
policy.
Don’t Miss the CPD Deadline
Report on-line today at www.icam.mb.ca!
The CPD Reporting deadline for CPD completed in 2009 is March 31, 2010. This marks the
end of the first three year reporting cycle. Members must meet the annual requirement for
2009 as well as the requirements for the three year cycle (if applicable) ending December 31,
2009.
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Each member must complete a minimum of 20 hours annually.
Each member must complete a minimum of 120 hours in each three year rolling cycle
(commencing January 1, 2007), including a minimum of 60 hours verifiable.
Members living outside Manitoba are required to submit a declaration indicating you
have reported to another provincial institute or foreign accounting body. If you are not
reporting elsewhere you must report detailed hours to the Manitoba Institute.
REMEMBER - you do NOT need to report courses that you attended at the Institute’s
CA Learning Centre because your CPD was automatically updated when you signed the
attendance sheet.
Go to the Institute’s website at www.icam.mb.ca and under the Professional Development
drop-down menu select Continuing Professional Development and then click on Report CPD
Hours. Review the instructions for the on-line CPD reporting system and report your hours!
A copy of the CPD Reporting Form can be downloaded from the website for you to complete
and return to the Institute. Or, you can request a copy of the reporting form by contacting the
Institute at 942-8248 or icam@icam.mb.ca.
Explanations about exemptions and verifiable vs. unverifiable PD are available at www.icam.
mb.ca > Professional Development > Continuing Professional Development > Report CPD
Hours.
CPD Reporting Deadline is March 31, 2010!
Please ensure that there are no such
exclusions in your policy.
3. Some insurance providers restrict coverage
for services performed prior to the inception
of a policy. While this may seem reasonable
on the surface, policies for professional
liability insurance are written on a claimsmade
basis. This means that a lawsuit made
today could be for services provided as far
back as six years ago and if your policy does
not provide coverage for your prior acts;
there will be no coverage for the claim even
though you had a policy in force at the time
the services were rendered. Therefore; your
policy must provide full prior acts coverage.
4. Since policies are written on a claims-made
basis, the Institute requires that insurance
be carried for a minimum of six years after
a member dies, or ceases to practice. If you
are a partner in a firm; the firm usually
continues to carry insurance for retired
partners and former partnership throughout
this six-year period. However, if a sole
practitioner retires, he/she must continue to
carry professional liability insurance for the
six-year discovery period. Please ensure that
your policy provides coverage for this entire
period.
5. Many insurance providers indicate that
they provide worldwide coverage; however,
upon more careful review of your policy you
may find that coverage is only available if
the suit is brought within North America
and Bermuda. Generally, if the Canadian
CA is doing work outside Canada, which is
happening more frequently as CAs work in
the global marketplace, any ensuing lawsuit
would be brought within the country where
the services were performed.
It is your responsibility to ensure that your
policy provides the coverage required for you to
meet the Institute’s mandatory insurance by-laws
that have been put in place to protect the public.
Always read the fine print in your insurance
contract. That way you will not be surprised if
you ever face the unfortunate situation of having
to make a claim under your policy.
This article was written by Gary Hannaford, FCA,
Chair of the profession’s Public Trust Committee
and Justine Bond, CEO of AICA Services Inc.
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