George KOUTINAS, CEO KOUTINAS S.A. - Insurance Broker Services, Lloyd's Binding Authority 15 September 2011

15 September 2011 —
george_koutinasXPRIMM: Professional Indemnity Insurance seems to be core specialty of KOUTINAS S.A. Why do you consider it is of such a great importance?
George KOUTINAS: First of all, I think I should remind your readers what does the Professional Indemnity - Errors & Omissions mean. It's importance becomes obvious as soon as we say that this insurance covers the claims against the Insured presented by its Employer or any Third Party for alleged negligence, error or omission in the frame of his professional activity. In fact, the practical meaning of this insurance is "provision of legal support and financial coverage for remuneration of claims that fall into the Civil Liability of the Insured Professional".

In more practical terms, the Professional Indemnity insurance provides:
  • Legal protection by experienced Lawyer assigned by the Insurance Company for the advocacy of the interests of the Insured when he is accused for an eventual error or omission.
  • Financial remuneration for financial loss of the Insured's Employer or of a Third Party in case of error or omission of the Insured. 
  • Financial remuneration for Bodily Injuries or Death of any Third Party (valid for Engineers and Physicians) 
  • Expenses and judicial costs related to claims for remuneration, which cannot be settled extra-judicially.

XPRIMM: Probably, one should say that the real professionals who are dedicated, very well trained and scrupulous with their work don't need it. Moreover, it is rare to have accused professionals for their eventually bad services.
G. K.: This is not true. Errors and omissions are characteristic to the human nature, especially when we are working under the pressure of a deadline, or in a stressful environment. Any Professional assumes responsibilities that might lead to a damage or financial loss. The respective remuneration for claims against him might be "very heavy", even unbearable compared to his professional fee and his financial capacity.
Moreover, in our days the economic environment and the society itself are changing very rapidly, transactional ethics also change and every Professional can be accused, even maliciously for errors or omissions he has not made.
In this context, modern professionals, both Natural Persons and Corporations, need legal and financial protection in order to be able to proceed unhindered to their activities, without any additional stress for eventual consequences due to their errors or omissions.
Finally, I would say that current business conditions impose the Professional Indemnity Insurance not only as an element of safeguard, but also as a proof of reliability, as the "guarantee" for the services provided.

XPRIMM: Who should be interested in buying this coverage and which are the benefits of doing so?
G. K.: In short, every Professional providing services for a fee, regardless it is a Natural or Legal Entity. Probably, the most "obvious" categories are architects & consulting engineers, lawyers, certified auditors and accountants, insurance intermediaries, consultants of any specialty, surveyors - valuers, tour operators, different categories of service providers. It is a very long list.

XPRIMM: It is worth mentioning that for many of these professional categories, professional indemnity insurance is compulsory. And, many of the professionals in order to comply with the law are already insured. Which is your comment about this?
G. K.: The real important remark here is not just to typically buy an insurance cover. But to buy the proper insurance providing adequate indemnity limits. It is frequent that many professionals, apparently not well advised by their insurance consultant or their insurance broker, buy a cheap insurance policy with very low indemnity limits, since in many countries there is not any minimum coverage limit stipulated by law. Such attitude is very dangerous. It presents legal compliance and provides a certain "psychological" feeling of security. But in practice is not insurance!
The amount of claims that may rise didn't take into consideration the indemnity limits foreseen in every Insurance Policy or the minimum limits eventually set by a law. Such a Policy with adequate indemnity limits and more clear conditions is needed.

XPRIMM: What is for you a well-established Insurance Policy?
G. K.: It is the one that inspires a real feeling of security to the Insured professional. More specifically, it is the one that offers substantial legal and financial coverage and guarantees that the Insurance Company will remunerate an eventual financial loss to an Employer and/or Third Party due an error or omission committed by the Insured. Besides these definite benefits, a solid professional indemnity policy is an excellent proof of quality and reliability of the services provided by the insured to third parties and an incentive for creation and business development, as through the sense of security such insurance provides, the Insured is encouraged to assume professional risks and initiatives.

XPRIMM: What should we have in mind examining a Professional Indemnity Insurance Policy in order to be sure we've made the good choice?
G. K.: First, you have to be sure that you are talking about Professional Liability cover and not just a simple General Third Party Liability Insurance. Second, as I have already said, to assure that insurance cover is provided at adequate indemnity limits.
Then, if these two basic conditions are fulfilled, one should examine the Policy conditions, to verify that no abusive restrictions and exceptions are included. For instance, the policy should not exclude claims relevant to "cases that have a high probability to occur" or explicitly exclude claims referred to coverage of "any consequential financial loss"!
Also, under no circumstances should be accepted an explicit clause mentioning that "the Policy remunerates only after a final and irrevocable judicial resolution"! In consideration of such a clause, it is obvious that the Insured Party will have to wait certain years for the Insurance Company to cover him. In the meantime, the Insured will continue to be considered involved in judicial procedures and continue to pay premiums.

XPRIMM: How to proceed for a Professional Liability Insurance Policy?
G. K.: As usually, as in every kind of insurance cover, by filling of a standardized Insurance Application Form (respective to the professional activity) and by trusting an experienced Broker capable to provide the right solution at the right conditions and the optimal cost.

XPRIMM: What can you offer in this procedure? Which is the role of your company "KOUTINAS SA" - Insurance & Reinsurance Brokers, Lloyd's Binding Authority?
G. K.: We have developed a unique know-how and experience in Professional Indemnity Insurance over the last 12 years in the Greek market, by being the "first movers" in this business area. Lloyd's of London backs our services at 100%. In this moment, more than 800 policies for various professionals and a total net premium exceeding the amount of 6,500,000€ may prove our capabilities in this field.
This experience, we strongly wish to promote in the SEE markets. In fact, we have already made the first steps in Romania, Bulgaria, Cyprus and Slovenia. We don't intend to develop direct business but to create long-term business partnerships with licensed local Brokers. To this extend, we do believe that the professional relationship we have established with the Lloyd's of London, gives an excellent possibility of a fruitful collaboration with the domestic Brokers to benefit from this unique insurance market of Lloyd's.

XPRIMM: Speaking about Lloyd's, is your Lloyd's Coverholder status adding any special value to the services you provide?
G. K.: As you know, a Lloyd's Coverholder is an Insurance Broker who, according to a Binding Authority Contract signed with a Syndicate of Lloyd's - in our case the Catlin Syndicate, the largest one at Lloyd's -, has the authorization
  • to assume risks on behalf of Lloyd's,
  • to issue insurance policies and 
  • to proceed to the management of eventual claims.
Such a status, confirms a high level professionalism in the insurance industry.

It is worthy to be mentioned that besides the legitimacy audit by the country's Supervisory Authority, a Lloyd's Binding Authority undergoes periodical audits - technical and organizational adequacy controls-, by Lloyd's and by independent Auditors. These are probably the most reliable, internationally acknowledged Solvency Certificate for an Insurance Broker.

KOUTINAS SA, as a licensed Insurance & Reinsurance Broker operating under "Freedom of Services" status in EU countries, since the begging of this year, has extended the Binding Authority of Lloyd's to be also valid for the nearby Romanian, Bulgarian and Cypriot markets. Such a condition allows us to operate as an Underwriting Agency issuing Policies on behalf of Lloyd's - to offer technical support and a good commission to the partner Broker and to take care settlement of claims by following reliable procedures of Lloyd's.

XPRIMM: You have mentioned your intention to find long-term partners among the local brokers. What should they do, if interested in your proposition?
G. K.: First, they should visit and study in detail our website, also available in Bulgarian and Romanian. Then, without any hesitation to contact us asking any question about professional liability insurance or present any inquiry. Aiming to a long-term collaboration with mutually profitable interests, we should be more than happy to respond.

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