LawPRO will freeze its base rate for 2012, meaning Ontario lawyers will pay $3,350 for professional indemnity insurance.Delivering LawPRO's report to Convocation, Law Society of Upper Canada Bencher Vern Krishna, also a member of the insurer’s board of directors, said the rate looks good when seen in the longer-term context.
"It's very important to understand that $3,350 is the average level of premiums for the last 15 years. In other words, although we have seen some spikes in those 15 years, this is the average," he said.
Krishna went on to explain the effect of inflation meant hat the current rate is actually about half what it would have been worth 15 years ago.
That's despite claims costs that remain at all time high levels. In 2012, LawPRO projects it will pay out claims worth about $89 million. Since 2007, the total cost of claims has been stuck above $80 million, whereas between 1995 and 2006, claims costs fluctuated between $50 million and $63 million per year.
LawPRO is also battling tougher regulatory conditions and low investment returns in the wake of the credit crunch. In 2012, it's predicting investment returns of 3.75 per cent.
"I never thought I'd say 3.75 per cent is a good rate of return, but we got used to higher rates of return in the good old days," said Krishna. "It's the best we can hope for."
