PROFESSIONAL INDEMNITY INSURANCE

COUNCIL OF ENGINEERSJANUARY 22, 2014

Transferred Risk(Insurance)

Reduced Risk(Safety Measures)

Avoided Risk

Retained Risk

Level Of Risk

RISKS MANAGEMENT – MIX STRATEGY

To indemnify the insured against legal liability for any claim first made against them during the period of insurance.

Arising from Wrongful Act (i.e. negligent act or error & omission) in the conduct of the Professional Services practice carried on by the insured.

Professional Indemnity Policy would provide cover for:- compensation, and/or damages awarded against professional legal costs and other expenses associated with defending

legal actions (subject to consent of the insurer).

PROFESSIONAL INDEMNITY INSURANCE (PI)

DEFINITIONSWrongful Act shall mean any error, misstatement, misleading statement, act, omission, neglect or breach of duty committed, attempted or allegedly committed or attempted, by an Insured while performing or failing to perform Professional Services.

Professional Services shall mean services performed by an Insured solely in its capacity as their Business Practice for or on behalf of a customer of the Insured.

Business Practice shall mean the business conducted by the Insured, as specified in the Schedule.

Retroactive Date1/1/2011

2011

Claim Made16/11/2013

Claim first made on 16/11/2013, Wrongful act happen on 15/5/2012

2012 2013

Wrongful Act15/5/2012

2014

1st Policy 2nd Policy 3rd Policy

CLAIM MADE BASIS

Claims made basis shall apply only to wrongful acts which happen, and for which claim is made against the Insured, while the insurance is in force.

Limit of policy, Up to client, Normally Limit ~ USD 1 M – USD 20 M

Deductible, ~ > USD 10,000

Premium, ~ > USD 7,000

PROFESSIONAL INDEMNITY INSURANCE (PI)Policy schedule

1. Annual Policy- For all activities of the Insured and shall renew every

year. 2. Single Project Policy

- For Specific activity with period more than 1 year. Generally up to 10 Years.

3. Excess Layer Placement

- In case of Higher Limit, Broker may use Local Insurance as Primary Layer and use International Reinsurer as Excess Layer

Type of Policies

- Libel and Slander

- Project Management

- Outgoing Principals

- Loss of Documents

- Intellectual Property

- Joint Venture Liability

- Consultants, Subcontractors and Agents

- Run-off Cover Insured Entity or Subsidiary

POLICY EXTENSION- Estates and Legal Representatives

- Acquired Entity or Subsidiary

- Fraud and Dishonesty (Optional)

- Increased Aggregate Limit of Indemnity

(Optional)

- Prior or Pending Claim

- Known Claim & Known Circumstance

- Fraud and Dishonesty

- Assumed Duty or Obligation

- Related or Associated Entities

- Fines and Penalties

- Punitive Damage

- Nuclear

STANDARD EXCLUSION- Supply of Goods

- War & Terrorism

- Absolute Asbestos

- Previous Business

- Bribe & Illegal Payment

STANDARD PREMIUM PRACTICE

Business Type

Annual Report & Overall business

Experience & Qualification

ClaimHistory

Limit of liability

Deductible

PROFESSIONAL INDEMNITY INSURANCE (PI)

Non Preferable Risk

* Geotechnical / Soil * Environment Engineering * Nuclear Engineering * Mining Engineering * Chemical Engineering * Aeronautical / Space Engineering * Marine / Naval Engineering * Offshore Platform Engineering

Limit of Capacity USD 20 M USD 5 M – 10 M USD 10 M

Single Project Period 7 Years > 10 Years 1.5 Years

LOCAL CAPACITY USD 5 M – USD 20 M

INTERNATIONAL CAPACITY USD 10 M – USD 30 M

Example Of Local Capacity

Market Capacity

Client

Application

Insurers

1. Insured complete Application Form submit to Broker.

2. Broker approach the markets for insurance terms.

3. Broker return Quotations with suggestion to Insured.

4. Insured select the prefer one, then receive Policy from Broker while Broker continue support for any claims that may occur.

PROCESS OF BUYING POLICY

Broker

Policy

Insurer InsurerInsurer

ROLE OF INSURANCE BROKER

To work for insurance related issues on your behalf To assist you in buying insurance and not selling To analyze and survey of your insurance needs and

arrange the insurance which most suits to your exposure.

Market with underwriters different appetites and capacities.

To clarify and discuss with you to choose the appropriate insurance program

To handle and manage the claim until the claim is finally settled

CLAIM EXAMPLES

6 Storeys Shopping Complex at Samutprakarn, Concrete Beam Cracked in 2013

Rectification Cost approx 6mb

CLAIM INVESTIGATION

1. What actually happened? Concrete Beam Cracked

2. What went wrong? Incorrect Design

3. Why did it go wrong? Loading calculation error

4. Was the Insured or one of their employees responsible for what went wrong? Yes

5. Is the loss covered by the policy? Yes

6. Are the Insured’s business activities correctly described in the policy schedule? Yes

7. Was the loss notified in accordance with the requirements of the policy? Yes

INSURED

INSURANCE

CLAIMANT

Claim First Made

ClaimPay damages, Indemnity

Pay Defense, In

vestigation

BROKER

Broker report claim andassist Insured to get their Claim.

Consult

1 2

34

CLAIM PROCESS

STANDARD CLAIM PRACTICE

The Insured must give to Broker a written notice of any Claim first made against the Insured - as soon as practicable and during the Period of Insurance.

Relevant documents : The date in which the Insured/Company first became aware of the

matter, if other than the court summons. Notice letters and/or demand letter and/or other written

correspondence from the claimant etc. (if any). Other additional documents, if required.

In case there is a circumstance which the Insured realize that it may lead to a claim in the future, it is required by the Insurer to report such circumstance to reserve the right of claim. Broker may also be able to advise you about whether a situation is a circumstance that should be notified.