Claims (November 01, 2010)

E&O INSURERS CAUTIONED TO BE AWARE OF INQUESTS, DISCIPLINARY HEARINGS AGAINST INSUREDS

Insurers defending professionals should be aware of inquest or disciplinary hearings involving insureds — even though these ‘sideshow’ proceedings might not be covered under E&O policies — because of the potential impact the proceedings may have on a subsequent civil action that does come under the E&O policy.

Jamie Trimble of Hughes Amys LLP raised the issue of the need to pay attention to inquests and disciplinary hearings at The ARC Group of Canada’s 5th Annual Seminar & Cocktail Reception on Oct. 28 in Toronto.

“There are some professional liability policies that do grant some defence costs relief to the insured, presumably because that insurer recognizes that the impact of the disciplinary hearing, or whatever ‘sideshow’ it is, will come back to haunt them on the civil action side,” Trimble said.

Disciplinary hearings are tricky for E&O insureds, Don Dear of McLennan Ross LLP noted, for at least three reasons:

• the standards of regulatory bodies differ with each profession and territory;

• sometimes people sitting in judgment on behalf of self-regulated professional bodies are tougher on peers

appearing before them; and

• evidence and testimony made public at the inquest or disciplinary hearings can sometimes find their way into future trials.