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The Irish Accounting & Tax Summit
Session 5 - The COVID-19 Insurance Implications
Session 5 - Presentation
This transcript was created using AI and may contain some mistakes.
Martin has 35 years experience working in the London insurance. America’s the middle East and 25 years experience in the Irish insurance sector, professional indemnity management liability, cyber risk, professional risk management, or just some Americans set specialisms. So just as regardless of the downloads, Martin has provided some slides for today’s session, which jr or Elizabeth would put a link into in the comment box.
If you haven’t already downloaded those, please take the time to do so. Anyone who would have been on the previous sessions, um, will be familiar with, um, with, with our, uh, questions and answers function. So please send in questions, anything that’s you go, don’t be, don’t be afraid to send in questions. We appreciate them.
There’s two ways you can do this. There’s a chat box, which you can type your question in, and it might be best to direct that to either all the panelists or to myself. Um, just so it goes directly to the entire, to the entire group of attendees. Alternatively, alternatively, there’s a Q and a box, which you should see at the bottom of the right of your screen as well.
We’ll try and get through as many of the questions as we can, and if we don’t get them, get to them during the session, we’ll try and get to them after. So we get started on today’s session. I’ll hand over to you to Martin American us to take us through what the areas that you’ll be covering today. Okay. So what I want to do today is really just cover,
um, a few topics, actually. Um, the state of the profession, then the team markets. Um, we all know that there’s a bit of a, um, difficulty out there. Um, will there be any professional indemnity claims from COVID-19, uh, how we see it? Um, obviously it’s completely changing day by day, and it’s had a massive,
massive impact from March until now a bit about risk management and how to handle claims and what to do for claim comes in. Um, and then a bit of our cyber security. I know that the, one of the, uh, one of the talks is, uh, purely on cyber. So I won’t dwell too much on that. What I’ll do is just advise people on Mmm,
cyber insurance, what it covers, why I think you should have it. And then the guys that are actually providing the cyber, um, presentation could go into the technicalities of it. And then just a bit of Roundup at the end on any employment issues. So obviously we’re looking carefully to see, uh, what your responsibilities will be when you go back into the office for your employees and whether that has any implications for ’em for reopening the office and what you have to do.
And a couple of touch points. There’s a lot of information online on that as well, but I’ll just go through the main points of it. So if we kind of start off with, um, what’s happening. So, you know, what we’ve seen from 2008 to the current date is we’ve seen a significant increase in claims on profession density. Now that’s across the board.
It’s not just accountants it’s across every sector. Mmm, no. He would have said that accountants would have been a fairly good bet. Um, but worryingly, I suppose I’ve seen six figure claims against accountants. It’s not uncommon at the moment. So yeah. You know, the problem is that this obviously has an impact. I had a, I had a risk,
but I w I was asked to look at recently and they had an 650,000 Euro claim on for, um, interest and penalties from tax. So the more and more we see, uh, claims going and getting over the hundred thousand, then that has implications, obviously for insurance, we’re still seeing these periods claims as well, where counterclaims, where fees are not paid,
and the client still tries to take an action against the accountants. And, um, you know, there are ways and means of dealing with those. I’ve always said in my presentation that if a, if the fee is that dispute and, um, the client is really just trying to put in a claim against you to try and reduce the fee. If you’re on talking terms with them,
just sit down, I have a zoom call with them at this stage, or meet up with them and just say, look, can we come to some arrangements? The one thing you have to do though, is if the client says, okay, well, if you reduced the fee by 20%, I’m happy and I will pay it. You have to absolutely make sure you get in writing from that client that they’re retracting the claim against you.
Cause there’s no point in reducing your fee. And then you actually have a, have a, still have a claim against you. As I said, with the size of the claims, um, I’m surprised. I mean, you know, before I would have said 20, 30,000 Euro claims, but now they’re pushing up to the six figures and we’ve also had some multiple claims for investments.
There’s still a couple of, um, old chestnuts out there from, um, the S is actually, so we would expect that, um, if one of those claims actually, um, is successful, then you’ll get a class action, um, from all the investors on the, on the BS. So just on, um, pretty locked down I suppose.
And, um, and what happens. So the professional indemnity market worldwide is going through a massive correction process at the moment. Um, and this is having an effect on premiums effectively. The premiums have been too low for the claims to the coming in against professional indemnity. So a lot of insurers are saying, right, okay. Um, what are we going to do about this?
I mean, there’s been some, there’s been some big, uh, withdrawals from the Irish markets. I mean, notably AIG would have written a lot of accountants in Ireland and they’ve basically closed their book completely. Now I’m amazed at this because in 2018, they came to us and said like, Hey, we’re going to have to increase our rating for accountants,
which is fair enough. I mean, the rates that they were charging were actually, um, very low. Mmm. But on top of that, and I didn’t even look to see whether that rating increase, had an impact on their profitability. They just decided after about, um, 12 months, but it wasn’t working and they were pulling out. So you’ve got the likes of them and you’ve got the likes of AmTrust to hold out wr Barkley.
So these would have all been, Oh, research based insurers, writing Irish profession, then T and then on top of that, you’ve got the Lloyd’s market in London. Now Lloyds have told all of their professional indemnity insurance. This is going back to 2018 Mmm. That they had to correct the book and they had to increase the, their rating on the profession then at T.
So from the we’ve got, there is that some of those decided, okay, we’re not even going to bother anymore. We’re going to shut up, shop women writing profession, then let’s see. So we’re facing a situation. We have an in house facility with Erica and it’s still writing business and it’s fine, but we’re under pressure to actually increase the rates on our facility.
So I’m not saying accountants are in a situation where they’re, um, it’s, it’s a, um, it’s a catastrophe situation at the moment because people they’re all still insurers out there quoting for accountants, but the market has reduced significantly. Well, we are seeing is that, um, some sectors on construction profession, community, it’s almost impossible to obtain professional,
then you cover going forward. So all of this is having an effect on the premiums. I mean, the premiums, you should expect your profession then as you premium to increase this year. I mean, like I’ve seen some of the risks that come across my desk where we’re looking to, quote clients have set, their premiums have gone up a hundred percent.
I’m not so sure that that’s the norm, to be honest, but there will be a rating increase going forward. And th that’s driven by two things, really the, um, the competition isn’t there. And also the claims are there as well. So that’s, um, that’s forcing the insurers to actually make a decision on what to do. It’s true.
What I would suggest to anyone who’s got a professional indemnity policy coming up, or even in the future. Mmm. Before you could just fill in the proposal form, send it to your broker. Great. Everything’s hunky Dory. They’ll do the market. They’ve got the quotes back and away. We go, you need to put in a bit more effort this time,
really. And you need to try and present a risk because the insurers know that they can pick and choose. So you need to make sure that, okay, my, my profession then the T is better than the last person. So you need to kind of dress it up a bit, if you can. And if you’ve had notifications on the policy for any particular claims or anything,
you should actually highlight exactly what happened with those claims on notifications and the remedial action you’ve taken to rectify anything happening. Again, I actually looked at the risk of this morning and it had three notifications on it. They were all similar. And that’s the one thing that ensures I don’t like, you know, it’s okay. If you have a claim, it’s just a fact of life.
We all make mistakes. And that’s where the claims come from. But if you have multiple plans, if you have three or four claims, well notifications, emanating from the same class of work, if it’s tax or whatever management consultancy, then that’s the one thing that’s going to scare of insurers, to be honest. So you need to, if you had a notification on your policy,
you need to explain exactly what remedial action is being taken to actually rectify that. Sorry, just, um, just given, obviously there’s, there’s a heightened sense of risk and premiums are expected to go up. How, how easy would it be for a firm to be maybe priced out of America? Do you want to see if you have a few significant claims or if you few complaints,
do you get to a point where it’s difficult or are next to impossible to get insurance? Yeah. Well, um, I suppose you’ve got, you’ve got two issues there. I mean, obviously chartered accountants have the assigned risks pole. So, um, if you can’t get insurance and, um, in the market, then the assigned risks, Paul has to take on the risk.
Okay. So I’ve seen a couple of insurers, got a couple of accountants going to this, the assigned risks pole because of claims the, um, the, the rating in the assigned the risks for it is horrendous. It is really expensive. So that’s a place you really don’t want to go unless you absolutely have to. So, While I would say to people is Just think about you,
your profession, then the T policy is your policy. Look after it and try and present it properly. If you’ve had a number of claims and you can explain to the insurers, okay, we’ve had a number of planes. I mean, I had to, I had a case where, um, they had a claim and it was for entertainment clients.
Now, entertainment clients are notoriously Mmm. Litigious in suing their accountants. Okay. So, um, they said, look, we’ve had this claim. It was a fairly large claim. It was from an entertainment. And they said, we’ve, we haven’t Mmm. Transacted any entertainment business for the last three years we’ve got rid of this business. We’ve decided it’s not worth it.
So then you can actually say, right. Okay. We can look at this pragmatically. And so, okay. We can, we can take a, take a risk on this and put a quote up. So it’s all about presentation really. And, um, just timing, a number of claims. Won’t actually preclude you from actually getting a quotation.
It’s going to be harder. I agree. But, um, no, it wasn’t actually recruited. And, and as I say, you don’t really want to go down to the, um, the assigned risks port because, um, I had, I had to get a quote from their sign risks for one of my clients, and it was 250,000 euros,
which they said, it’s just not worth it. We’re packing up. And, uh, my understanding to Martin is that they assigned risk pool. It’s not an indefinite period of time. I think it’s two years or something like that being Assigned miss pool for two years, and then you have to go to the open market. So, um, you know,
you just need to think about that as well. And, um, it is going to cost you, you know, so as much information as you can give, as I say, account on not in the position, like where are you doing professional identity across the board. And so we’ve got building contractors, the handling cladding and fire safety and everything.
And they are in a position where, but firstly, impossible to go to court, worked on some of these risks. So accountants are not at that stage. Um, you shouldn’t be able to get some sort of cover at a price, but I’m just warning you now that the premiums are going up. So, And this kind of leads into a question that we have in here from Paula who has asked,
is there any reason why an auctioneer’s Pia insurance would increase by 150% in one year when turnover is the same and no claims have been made on the existing policy or prior policies? Okay. So, Um, professional indemnity is, is increasing across the board. Um, like as I say, like I have seen some clients come to me and say that their premiums are increased by a hundred percent.
Um, what we’re finding is that some of the premiums were too cheap, um, last year. And so there’s been a correction, 150% is a bit higher, but, um, you know, and in relation to auctioneers, I mean auctioneers and surveyors, again, there’s a limited market in the amount of insurers that will actually ensure auctioneer’s professional identity.
The, the problem that we have with auctioneers and surveyors is that, um, the London market, it doesn’t like surveyors. Okay. Um, with the housing crash in the UK, a lot of surveyors were sued, um, because of the, because of the crash. And there was massive payouts on surveyors. It hasn’t affected Ireland is never affected Ireland.
Like all the claims when the housing crash was more against the, um, the legal profession rather than the surveyors. So it’s really just trying to get that point across to the insurers. Surveyors in Ireland are a different risks are surveyors in the UK. And the problem is, is just trying to convince them it’s easier for them to say no, rather than put up a quote on site.
Okay, we’ll have a go at this, but 150,000 is quite a, quite a significant increase. Uh, just moving on in relation to COVID-19 claims. And obviously there’s a lot of press about this and, you know, is there going to be any claims, um, for COVID-19 and um, what effect is it going to have on insurance? So just moving aside from professional identity for a moment and saying COVID-19 is having a massive impact on insurers.
Okay. Forget about just professional identity by insurers in general. Like, I don’t know whether people have seen, but like there was a payment for the cancellation of Wimbledon tennis tournament, a hundred million pounds. Okay. So everyone, every virtually every insurer is on that risk because it’s so big. So they made the claim and they paid the hundred million.
So there’s a class action against Hiscox in the UK, well payment business interruption claims, and they’d been hit with a 14 million pounds arbitration bill just for those claims. Okay. So you may have read it in the paper. Erica’s, there’s a claim against directness. Mmm. Um, COVID-19 and this is in the press. So I’ll tell you about it.
It’s the push up group, the Clarion hotel, the Clayton hotel in, in, um, and in Dublin, YouTube and Clarence, sorry. Um, so they’re claiming that their policy, they weren’t aware of their policy didn’t cover COVID-19 claims. Um, even though we’ve got complete track record that we’ve told them to read the policies and make sure that it complies with their requirements and no response back saying we haven’t got pandemic cover under the policies.
So obviously we’ve got a good case to defend this. This could cost us a lot of money just to defend and insurers the insurance or RSA group. Mmm. So it’s going to cost them. It’s going to cost them a couple of million to defend this effectively because you’ve got, you got big business behind this with deep pockets that will actually take the claim all the way to the Supreme court,
if they can, for an answer. So regardless of whether the policy actually covers COVID-19 claims or not, um, the actual cost to insure us is going to be absolutely huge. So the last count Lloyd’s expect the cost of COVID-19 claims to be around about 2.5 billion. And if you look at it, if you look at just the, like the Wimbledon example,
you look at the amount of events that have been canceled. I know some of the, the, um, the bands Mmm. All the, all the, and have cancellation come up for their, for their, um, tourism things. There’s been five, 6 million Euro payouts for cancellation of the, um, of the concerts and things. So if you add all of those up,
it is going to have an effect on the bottom line of insurers. And then on top of that, obviously equity markets are down. And so that affects their income. So I don’t know what’s going happen. Um, at the end of COVID-19 and where the insurers start to recover, it’s becoming a harder and harder market to actually place business, stop,
let alone, um, professional identity. So I would just be aware that Mmm, you know, the market is in a significant turmoil at the moment, and you need to be prepared for that. Okay. So moving on. Okay. So just on PII issues. Okay. And, um, whether there will be any PI issues for accountants following,
um, COVID-19 so this all happened at like a drop of a hat effectively, you know, the weekend before and his day, everyone was panicking, shutdown, whatever. So there are all sorts of things that happened. Like we had to ourselves here, we had to get everyone, um, access to remote working, and it was mad, panic working.
God knows what I know, obviously the, um, the changes that were being made by the government for payments and, um, you know, what applications they can make and the three 50, um, you know, um, payments and things like that. So will they come back to haunt accountants? I’m not sure whether it will. It depends on how quickly there is a recovery,
to be honest, I think that, um, you know, obviously we’ve started the easing of the lockdown now and, um, if people just get on with their job and they, if they’re fairly successful in actually rebuilding their business, I’m not so sure whether there will be, Mmm, potential claims against accountants. I think the problem comes where someone’s suffered a loss or their income has dried up all their companies.
If their company trading is affected and they look after the event and say, okay, well, no, it wasn’t. I given the correct advice. Why am I counseling? Could I have claimed more subsidy? Um, was there anything else out there they could have done for me? And that’s where potentially you could have an exposure. Now, the problem that we have is they will be company closures following COVID-19.
We on one of my other facilities, I run an insolvency facility and we’ve seen not a big take up in itself, but there’s definitely been a, an increase in the number of insolvencies. Now, I believe at this stage that the companies that are becoming insolvent we’re in trouble anyway. So yeah, they wouldn’t have, they wouldn’t have lost regardless of whether COVID-19 was affected or not,
but there will be some companies that are directly affected by COVID-19. And that’s when you’ve got to ask yourself, okay, you know, do I have any responsibility here? This company has gone into liquidation or receivership. It was a client of mine. Did I do anything that I’m, did I not do anything that I should have done? Or is there any exposure on me?
So that’s one thing to look at and also, Mmm. A lot of remote working now, and you need to just look at ’em the standard of work. Yes. Supervision that’s being, um, that’s being applied throughout your organization. Um, you know, staff are remote working, do they have the same, um, responsibilities? Do they have the same restrictions in what they can and can’t do,
um, one of the stock measures on your, on your policies to make sure that no incorrect advice is giving out to clients. Is there contacts between employees while they’re working from home to make sure that the standard of work is up to speed things up back? Do you know? You just need to look at it now. I’m not saying it’s going to happen because I actually don’t know what’s going to happen after,
after the, um, COVID-19 is lifted completely. I think the insurance market is going to be in a state of flux anyway, regardless of what happens, but from your own point of view, just do a review and say, okay, now, do we have any exposure here? Are staff working outside their authority? What sort of checks do we have on that,
that we can actually prevent anything going out without that shouldn’t go out or any advice that, um, it shouldn’t be given in this time? The one thing that I would say, and I’m quite surprised about is that a number of accountants have told me that they’re not issuing letters of engagement during COVID-19 for new work that they’re taking on for clients. So I would say to them,
I know it is a really difficult time and I know like work has turned upside down or what you’re actually doing, but the letter of engagement can save you so many times. And I even strongly recommend that, you know, you continue to issue your lecture of engagements. Let me just come on to a couple of things. It’s a bit of a hobby horse of mine,
but, um, you know, even if it’s an equal piece of paper, when someone else for you to, uh, you know, apply for the government, um, yeah. Employment scare that the, um, the wage scheme just write down exactly what you’re going to do for them. So it’s in writing and they can’t come back to you and say,
well, you never did this. And he never did that. So it is important even in this day and age that you issue, um, letters of engagement for everything you possibly can for every piece of work that you do. So it brings me on to the next slide, which is the quality management system, and this is difficult to, um,
comply with on remote working. So, you know, quality management system, it’s not rocket science really. It’s just the, uh, the terms and the standards that you were there to, to actually carry out your work. I think examples of quality management picking up things like incomplete documentation, no, a lot of stuff is coming through on email. Now,
a lot of stuff is coming through possibly on personal PCs or postal. What are you doing storing that information? Is he going on to the correct filing system? Absence of terms of engagement, as I said before, Mmm. You know, people are not issuing in terms of engagement in, in the lockdown situation on all cases. And that should be the norm across everything.
As I said, in the also staff operating outside their authority, make sure everyone knows what they, um, what their authority is and what they should, and shouldn’t be doing. Like we have a, a regular zoom meeting in our offices once a week, catch up with everyone, make sure everyone’s okay. Monitor the work. Um, anyone’s got any problems.
Everyone’s at the end of the phone. It’s not the same as being in the office where you can just turn into someone and say, what do you think of our best? But I’m at least keeping contact with everyone and disclaimers and reports of viewing reports in lockdown. Mmm. And they’re, they’re, um, a restricted circulation, or there’s a, there’s an issue with them then make sure that the,
the reports come out with the restricted circulation, all the, of the, um, all the disclaimers on them and also recruitment. I mean, when we get back before COVID-19, there was a recruitment, um, there was a, is that a lack of in employee’s Outback to recruit and, um, I don’t know how that’s going to be effective after the lockdown.
Well, I certainly saw in the last Celtic tiger, a lot of accountants take on employees. That weren’t exactly what they said they were. So the problem that you have with that is that once they’re on board, you need to try and, um, have an exit strategy for them. So if you are looking at recruitment, once we get back on our feet,
probably there’ll be a time of just, um, uh, status quo, I suppose. And just to get back to normal. And then if you start growing, make sure that you follow up on references on recruitments, um, cause it is so important that you don’t get the wrong person, just the wrong person can add it, um, problems with the,
um, with, with the, with the organization. The other thing that I’m, that does come to light actually is in the COVID-19 it’s none of my other great thing to talk about is, um, it’s fraught. So we had, um, a number of fraud claims. Mmm, no, the fraud wasn’t being perpetrated inside the accountancy firm, it was perpetrated inside the clients of the accountancy firms and the accountant falls pro to task.
I’m not spawning the fraud. Now we all know that the audit is not designed to pick up fraud, but sometimes we blatant fraud. Um, then, you know, there could be a question Mark against the accountant as to why it wasn’t spotted. Mmm. Now let’s just unload it. But simply with management liability, if there’s blatant fraud within an organization,
then potentially an accountant has a job to try and spot that. Um, so these claims are live. And, um, the problem that we’ve got is that there are, um, you know, the, there’s a, there’s an issue of gambling out there. And so there’s fraud within organizations, and this is something that perhaps companies, I finding it more and more difficult to control with remote working.
And so you just need to be aware of that potentially. Mmm. Then me the claims, um, for fraud against your clients, not, not the, um, not necessarily the accountancy firm, but it is going on and, uh, and you need to be aware of it. So I always recommend that we limit your liability on the letters of engagement,
and there’s a slight there with the, with the wording and the, I recommend you use, I recommend you use a five times fee limits unless it’s a specific, Mmm. Contracts, mergers and acquisitions are normally a higher fee. So with mergers and acquisitions, you can actually put in a monetary limit there, but, um, normally five times fees is adequate unless it’s a low fee and then you won’t,
um, then you actually won’t get away with it going back to the auctioneer. I have no internet, so that’s great. I charge a thousand euros to find your house. Can I put 5,000 euros as a, um, as a maximum viability? And I said, no, you can’t, that’s not relevant to the work that you’re doing, but you can actually put in say,
um, thousand euros limit there. So, you know, you just need to look at it and, and the adaptive for the, um, for your needs effectively. I mean, Martin, um, where, where did the lyrics come from? Are they recommended best practice by the Institute or are they enforceable in a court of law if it ever went to that?
So, um, Like I had various, um, disagreements with jostled accountants on this because I said I’ve always had five times fees and flaked on speed. So it’s actually been, uh, as held up in, um, in a court of law in the UK actually. Um, it hasn’t been tested in Ireland yet, but there were also, there was a case against Ernest and young and,
um, they had, uh, they had a 400,000 pound limit on there. Um, vector of indemnity claim was significantly higher than that and it to court, and that was all the we’re obliged to pay. So in relation to the limits, um, you need to make sure that you’re not caught by the unfair terms of contracts act. So if you have a smaller limit,
so if you have a limit of say 10,000 euros, you’re not going to get away with it. Uh, whereas if you have a reasonable limit, then it will stand up in a court. So challenge with the accountants a couple of years ago were saying, we recommend that you limit your liability to fees paid. So that’s madness. You could get fees paid of say 5,000 euros.
You can’t restrict your limit of liability to 5,000 euros. So no, if the end contract is 50,000 or whatever, whatever, then you can, you know, you can limit your liability to 250,000. So that’s where it comes from. It’s gotta be a reasonable amount, to be honest. Wow. Just where the claims coming from. Um, taxation is still beak.
Uh, as I say, like I saw already, um, 650,000 Euro claim for interest and penalties for incorrect tax advice. Probably the biggest one I’ve seen for a little while actually. But, um, so, you know, I’ve seen claims for a hundred thousand on tax as well. So, um, as, as I said in the first slide,
the, um, the claims are creeping up. The problem that we’ve got is the cost of defending the claims it’s high. Like I had a, um, I had a claim against the investment advice and it was finally settled for 112,000 euros, 48,000 euros of that was Lester’s costs. So the actual cost of the claim was just under 60,000, but,
um, the, the list is cost outrageous on it. So it’s just things to be a bear in mind with that, um, management consultancy, they generate claims because nobody really understands what management consultancy is. So if you are transacting management consultancy for clients, um, clearly marked down, go back to the lecture and then lecture engagement effectively and say,
this is what I’m doing for the client, ABC DNA. Full-stop, let’s say it because it can save you so many times. I always referenced to claim on that a few years ago, with management consultancy, it was a company that was in financial difficulty. The accountant was appointed by the bank, the carriage carry out management consultants. So the bank for the accountant was doing one thing.
The accountant thought they were doing something else. And the company thought they were doing something completely different. The company failed and the accountant was sued for a million euros. And this could’ve all been avoided. There was no letter of engagement by the way, this could have all been avoided. If there was a letter of engagement saying, well, I set out clearly in my lecture engagement while I was going to do for you.
And then that would have join it to a close. So dishonesty I’ve mentioned this almost Eden, not necessarily in accountancy practices or that I have seen some dishonesty in the counseling practices mainly for, for clients. And just to watch out for that. Um, and solvency is on the increase. Mmm. Well, I’m not sure what will happen. I think the third,
I think the fourth quarter will tell a lot to be honest. I think, um, once everyone gets back in the third quarter and they start trading, we’ll see where it goes from there. But, um, I think I’ve heard that the banks will stop putting the pressure on, in the forced culture if people are repaying loans and things. So that’s something to look out for.
Yes, as I mentioned, they come almost to thing of the past, uh, mergers, takeovers and due diligence. Um, they’re also highly contentious where you’ve got investment money. Um, there’s not a lot of them, there’s some accountants and specialized in those from an insurance point of view, mergers, takeovers and due diligence work is rated quite highly.
So, um, if you’re dabbling in it, then you might decide, okay, do I really want to do this and push up the price of the, um, profession indemnity and then all that I’ve been deliberately put last because we really don’t see any claims. Oh, that’s be honest. Oh, has always been so well protected against, um,
claims because of the, the latter. So, um, from infinitum. So, you know, we don’t really see any, any claims from audit. Okay. So just on claims and you know, the, um, I suppose we get to come to two types of, um, we get two types of reaction to claims against accountants or any professional,
to be honest, we get some people who just ignore them and I’m thinking they’re just going to go away and that’s it. And we get others that are actually, um, yeah, very aggressive and very angry. How can this client tell me that I haven’t done my professional job properly because it’s a very personal thing. It’s effectively a claim against your profession for the work that you’ve done.
And the problem is like, you need to just step back a bit. And just as soon as a notified notification comes in, you need to deal with it. So next couple of slides are on how to actually deal with a, and I can actually put them in a checklist if you want, or if you have access to these slides, just print them off when Nope.
But if you do have a notification, you can follow the procedure that’s in the, in the, um, in the slides. But the thing is when, if you get a notification of a claim or, um, an incident, then it creates starting point for you. So you can then investigate the situation. If you’re lucky enough to have a firm,
that’s got a number of partners in it, get one of the other partners or senior people to look at the notification does not involved in the work and say, do I have a liability on this? The important thing is that you do a report straight away. Okay. Mmm. Claims are time consuming, preparing all the information is time consuming. It’s non fee paying work that you have to do.
So the sooner you do it, the quicker you can get on with doing your fee paying work. Okay. So what I recommend is, as soon as you get notification, do a file review and do a report, I’ve had claims where, Mmm, the claim was notified. Nothing happened for a year, the claim resurrected itself. Mmm. Everyone looked at each other and said,
who did that work? Sure. That was a, some guy that’s, there’s no going off to Australia. Nobody knew what the hell was happening with the claim, what happened or whatever. So at the very least just do, if it’s just the notification, do a quick, a text, I’ll be on that final reports, um, to actually review exactly what’s happened.
So the main points I’ll like, investigate the facts. What’s the, what’s the client claiming against you for, you know, is there any specific area that they’re claiming for the work that you didn’t do and evaluate the issues? Are they right? Are they wrong? And put a, put a, um, basically you’re like a, um, on a piece of paper,
all the positives and all the negatives so that you can actually write, look down and say, okay, we didn’t do this properly, but we did this and we did this and we did this, whatever. So a detailed accounts of, of the situation. And if you do this straight away, it’s in your memory forever. So like they’re not having to recall a year later or six months later or whatever,
and identify and highlight all the, all the opinions. So your opinion versus the client’s opinion and just see where you come to that. No, a lot of insurers will say to you, if you, if you stick up your hand and say, okay, I think I’m liable for this. Like, we’ve had cases where I’ve had clients on to me and they said,
okay, we’ve made a mistake. I think I can get rid of this for 10,000 euros. Is the insurer in support of it and provided you provide an overview of the claim, your analysis of why you think you’re liable said, yeah. Okay, fair enough. If you can sell that for 10,000, we’ll reimburse you. And they got, they got it done dusted within three months,
McLean’s gone and you can all just move on then. So, you know, it is important just to have a look and see whether I’m see whether, whether there is a liability and if there is a liability and obviously Mmm. Try and resolve it as quickly as possible. Okay. So just on this, certainly if it’s, if it’s going to be a claim,
that’s going to be dragging on set time limits on it, but there’s nothing worse. I tell you what used to happen in Ireland was ensures you. And, uh, accounts is used to notify claim. Three years later, you get a letter, this claim has been settled. Then you pay the VAT element of the legal costs. You had no involvement in the actual running of that claim at all.
And it goes back to how to protect your profession. Then the chief policy as well. It is your policy, and you should have an active involvement in trying to settle this claim. So, yeah, identifying, writing all the salient points of the, of the instance and where you’re right, where you’re wrong and weigh up all the strengths and the arguments from both sides,
both their side and your side. Obviously you need to, um, you need to report the claim to the insurers as quickly as possible, but don’t just report it and leave it just following up, um, on a regular basis to make sure that you’re involved in the handling of the claim. Okay. So basically on, on that, it’s just a really,
Mmm, put a, if you, if you look at the last three or four slides, um, there are some steps there that you can actually put in your, in your procedures manual or risk management manual on how to handle the claim and just go through all of the points so that you can actively, um, you can actively manage the claim as quickly as possible and then get on with proper work.
So just a bit on cyber. And it was very interesting because, um, I’ve gone. I’ve had about, um, I’ve had five webinars on cyber so far following the lockdown, and everyone’s paranoid about cyber now. Cyber was here before. And, um, you know, there’s probably more of a risk with now that everyone’s remote working, they’re looking at emails,
they’re taking instructions from emails. Mmm. I would strongly recommend, again, like you, you contact the staff that remote working, just to make sure what they’re doing, what they’re acting on. And, um, any issues just to, um, just the content yourselves and say, is this you, is this correct? Whatever. So I’ve had,
um, I’ve had a number of cyber attacks claims against accountants, and I’m like to be fair. Most of them are around about the 30 to 40,000. So they’re not excessive, but that 40, 30 to 40,000 comes straight off the bottom line. I mean, I have one accountant where his whole system was, was frozen and, um, where he actually had cyber insurance.
So we, we, there’s a help line. We contacted the helpline, they tried to get the decryption keys from the dark web, which they couldn’t do. Mmm. So they were the, the helpline reached out to the hackers and said they would be paying the ransom ware to decrypt. If they paint a ransomware, would they give the decryption keys,
which they did. And, um, then the, the helpline actually reinstated all of the data for them. So that basically that costs 30, just over 30,000 euros. And he had a cyber policy to cover all of that. So it is important that, um, that we’re aware that, um, there is a rise on hacking with home. Homeworkers because they have the hackers believe they’re more vulnerable.
And realistically in the cyber webinars, all the, all the, um, cyber security experts say, they’ll go for the low fruit, the low lying fruit, same as burglar in a house. You know, if you, if your house is lot and it’s gotten alarm and everything, then they won’t go near it. It’s the same with the same with the cyber.
You know, if you’ve got serious protections on you’re sober, um, then they’ll just move on to the next one. The only problem is that those protections are lower because of the homeworking issues. So what is a cyber risk? Cyber risk is, is a risk of, um, any unintentional or unauthorized Mmm. Breach of any it system to gain access or to,
um, yeah. Data or physical go home to the system. So this can come from a rogue employee, never seen that in Ireland, to be honest, negligent employee seen those a lot where employees have either opened, opened attachments, uh, that they shouldn’t have been, and that’s infected the whole system. So again, like, I know there’s a sober presentation later,
but like, if you’re going to put all the protections in place and an employee opens an attachment, you might just will have no protections because there’s no couple there. Like we had a case where, um, it was a, uh, personal admin person in the office, senior partner in the accountancy firms that transfer 25,000 to there’s no transfer 50,000 to this client.
And the employee said we only have a maximum amount per year, per day of 25,000. So they said, okay, transfer 25,000 today. And 25,000 tomorrow, the employee, the senior partner went into the office the next day. So what the employee was doing is that who gave you the instructions to do that? And they said, I’m wa acting on your email that you sent me.
So immediately they contacted the bank. And so stop this, this transaction. Hm. So they managed to stop the transaction from the Friday, but the Thursday transaction had already gone through, and that was lost. So no effectively that costs them 25,000 people need to be aware of what’s going on and to say, okay, um, I’ve been asked to transfer money.
And if so, is it correct? A lot of soluble policies will ask for verbal verification before they actually transfer. So just to be aware of that, so what does it cover? It covers all the breach costs, the, um, the reinstatement of the data and the, um, the cost in actually analyzing where the breaches occurred, because any business interruptions.
So your time in actually fixing the problem, privacy protection is any claims by third parties for data preaches. Um, I haven’t seen a third party claim in Ireland yet to be honest, or the soluble claims are first faulty claims against stay the accountants. We’ve had some GDPR issues, which is covered under cyber. Mmm. It comes with the hacker damage.
Mmm. If you’ve got any websites or whatever, and immediate liability, so anything you released to the press, which is Sloan Russ, um, there will come a lat and they will actually come up and run somewhere that you have to pay to unlock your system. If there’s no other way out of it, it would come with a cyber extortion, computer crime,
transferring of funds, phishing scams. We all know about phishing scams, telephone hacking, if someone’s hacking the telephone and any defamation claims as well. And I’m running out of time here. So I think the main benefits of, um, of a cyber policy, it covers your damage. So obviously you’re obliged to report any cyber events within 72 hours to the data protection officer.
Um, so people know about it. You’re supposed to notify your clients that you’ve had a cyber breach as well. So, you know, your reputational risk is out there. It will cover any credit monitoring that you need to put in place to actually monitor any payments, if your pay roll or whatever. Um, it’ll give you PR and media guidance like GDPR issues.
We’ve had, um, we’ve got legal advice, which has come upon the signing of a policy to actually send out an email to everyone saying this is what’s happened and any forensic investigations or rectifications of the system. So they can tell you where the breach of code and you can find out exactly what happened and, um, and then fix it. So directors and officers is interesting because I’ve seen that,
um, some people are saying the COVID-19 might have an impact on directors and officers, especially no claims against directors and officers in Ireland, to be honest. Um, I think cyber issues will have an effect on D on directors and officers, if they don’t put the right precautions in place to protect the data. And so we may see a rise in that the,
uh, the COVID-19 claims are saying that if directors don’t have adequate protection and risk management to cope with COVID-19, they may take action against directors. I think there’s a bit far fetched, to be honest, cause no one had really thought about pandemic Calvert before, especially in Ireland. Okay. If you’re looking at maybe Southeast Asia or something where they’ve had the bird flu and cells and things,
perhaps it’s different, but, uh, I think it’s a bit far fetched if, um, if there’s any claims against directors for not actively, um, providing protection against, COVID-19 just a couple of things, Just, just as you’re moving off a slaver insurance there, Martin, we just have a question in from, from Ken who was asked cyber insurance be added to a PI policy,
or is it’s to be added to your general office insurance. Okay. No, what I recommend is that you take out a separate cyber policy. Okay. Um, there are some cyber policies that can be add to the general insurance policy, but you just need to look at the wording. So I’ve, I really recommend that you take out a separate cyber insurance policy just to give you an idea of cost.
Um, like we’re seeing cyber policies. If you take a limit of say 250,000 euros, we’re seeing a cost of around about four to 500 euros for that cyber policy, but there are, the problem will be God is their cyber policies and cyber policies. Some of them, I did an analysis of the top seven cyber insurers in Ireland last year. And I narrowed it down to two that I would use to be honest.
And the important thing is the reaction time of the helpline. You know, if you’ve, if your building burns down, you can call the fire brigade and that’s it. And okay, you’re sought out the claim later with a cyber policy. If the guys aren’t there on Sunday evening at 9:00 PM, just to protect your system by the time that Monday morning comes,
all of the, all of the data’s gone. So, um, you know, it needs, you need to make sure that whatever cyber policy you’re buying, that they have a good helpline. That’s going to be there 24 hours a day to protect you. Okay. Just bear in mind also that any cyber cover. So if you buy 250,000 or half a million,
all the limits are in the year rather than in there. Um, anyone claim. Okay. So, but realistically 250 to 500,000 at the moment will probably be sufficient for most accountants. It’s just, just to finish up really on employment practice. These claims are still out there bullying and harassment Plains. Um, I’ve seen some big claims against accountants, um,
for, um, redundancy and things like they take a lot of time and the employee nearly always wins. So just to be aware, you’re can actually buy a cover for employment practice liability. A lot of accountancy firms don’t seem to be aware of that. And also, what are you, whether there will be a spike in employment practice claims Mmm. At the end of the COVID-19 in a R M Oh,
employee’s going to refuse to go back to work. And what do you have to do? Like if an employee refuses to go back to work, what disciplinary are you entitled to take against them? And what are the employers duties on the, um, on going back to work now effectively, there’s a lot of information from the government on this, but like,
you need to do a risk assessment of your workplace. You need to upgrade your safety statements. You need to make sure that if you have any vulnerable people within your organization, that there’s special care taken to them. So that’s people with any underlying diseases or any elderly employees you have, you need to make sure that they are specially protected. So it’s important.
But, um, but you know, you, you addressed these and if you’re still all remote working and you’re thinking America and back into the office now is a good time to, um, to actually look at buyers. But if you need any information, you can come back to me on that. And I can give you some, um, some further updates on that problem going through the whole lot now.
So, And really that’s almost on time, month. Yeah. You’re, you’re a very, very punctual Martin. So I think this is the first one that I’ve done that hasn’t gone over. So, so well done there. Uh, one final question we have here just from, from Adele, she’s asked, um, what firms would you recommend for taking out cyber insurance?
So what firms would you recommend again, for insurance? We have a preferred provider, right? So, um, there’s a company called ascent underwriting and, um, they provide a lot of cover for ’em for cyber and say, like we had the, uh, we had the accountant where there’s where the system was frozen and the helpline was unbelievably good,
unbelievably good. You were always worried about, about cyber because you need to act like now you don’t need to, you know, you can’t wait. So, uh, we fund the helpline and they acted immediately and they were so good. And they took the client through the process. Mmm. They have, what they do is they have a, um,
they have a, a thousand Euro excess on their policy, but if you use their preferred providers, so we use their solicitors and we use their help lines to sort this out. They will waive the excess on the, on the claim. So the legal advice gave them advice on the GDPR and, uh, the helpline negotiated with the dark web to pay the ransom ware,
which I wouldn’t have a clue what to do. Um, so we’ve used them, um, three times on a claim now, and they’ve been very, very good. There are others, there’s CFC underwriting. Um, Hiscox, it’s cultural right. Cyber in Ireland, but the excess is probably around about five or 6,000. So there’s quite a high excess.
Mmm. You’ve got AIG, but the AIG, um, policy doesn’t cover social engineering. So you need to be careful of that. So just to explain what social engineering is, is it for, if a employee gets an email in saying we’ve changed their bank account details, can you pay the money into this account? Um, and the client does it,
and then that’s not covered under an AIG policy, whereas it would be covered under the, um, under their scent and the CFC policy. So, but if anyone wants to contact me on a rundown of insurers or a quote, we can do that. That’s no problem. Very good. Not that that’s great. I found that very interesting by satisfied all from,
from speaking with practices on a day to day basis, it’s it certainly is an issue that’s, you know, that’s, uh, that crops up from time to time. And I know from my previous dealings with in charge of the company’s Ireland and my previous role, you know, when firms do enter the assigned risks code and when they do get into trouble like that,
you know, prevention is always better than the cure. And you’ve given some great advice there that I know if you follow those steps, that’s why you should prevent those situations. So I mean that, there’s some very good advice there. I mean, on the, on the profession, then the T don’t leave it till the last minute, like get in as early,
like, you know, you only give yourself, well, if we lead in normal profession, then the two really, and just say to the, so the broker look, we understand there’s an issue in the market. Um, are you going to provide terms for us? Uh, we’re coming to five weeks before and can you get back just two weeks before the renewal date or whatever,
but there’s no point leaving it a week before. Just if you find that there’s trouble, then it’s going to be trouble everywhere. No, no, it’s fine. Unfortunately, that’s a, that’s the way of the world. I don’t know what’s going to happen with insurers and after COVID-19, if these clown sanctions start going through, then I don’t know what the insurance landscape’s gonna look like.
Yeah. It’s a, it’s certainly one to watch in the indirect ones, for sure. That’s great. So that brings us to the end of today’s session. Uh, we’ve a 20 minute coffee break from, from now until 1220. And from 1220, we have our tech session with Corey daily, from bizarres and he’s, he’ll be discussing tax planning in a downturn.
So I’d like to thank you all for attending, and I hope everyone found this session beneficial. Thank Mark. And again, for his expert insight into the area of insurance and its implications in the current environment, uh, to jr Elizabeth and everyone else mighty supports. Thanks very much. So we’ll see you again at 20 past 12. Thanks. Thanks very much.