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Those involved in the legal accounting and actuarial professions are in the business of giving advice. If that advice is misleading or results in the emotional or financial harm of the client then there is potential for litigation.
These three professions require insurance that differs from most professional insurance. This is because doctors, for example, are at risk of causing actual physical harm, while lawyers, accountants and actuaries are not. Their services are purely advice orientated.
Legal professional indemnity insurance
It is the responsibility of the firm to obtain professional indemnity insurance unless they are exempt from doing so by the Legal Services Board. Insurance must be obtained from the Legal Practitioners Liability Committee. Failure to secure insurance may result in the suspension or cancellation of the firm's practicing certificates. Insurance requirements for legal practices are outlined in the Legal Profession Act 2004.
Legal practitioners should obtain their own level of coverage, separate from the firm, to provide themselves with additional insurance if claims are made against them personally.
Each State has a governing body to explain the requirements of legal professional indemnity insurance.
Accountancy professional indemnity insurance
Professional insurance limits the liability of the accountant if they become subject to investigation regarding advice they have given. Professional insurance protects against financial loss caused to clients due to circumstances beyond the accountant's control, such as market failure, rising rates, shareholder dispute, receivership or bankruptcy.
Additionally, it guards against claims of embezzlement, fraud, tax evasion, misconduct, insider trading, collusion or claims of deception to gain financial advantage. The National Institute of Accountants offers advice on professional insurance for accountants.
Actuarial professional indemnity insurance
The Code of Professional Conduct for Actuaries clearly states that those providing actuarial advice must have a certain level of professional insurance. This coverage can be either personal or held by the firm.
Actuaries who are employees of the firm are not required to hold their own insurance as a condition of employment in the field. The employer is responsible for maintaining a level of coverage that protects employees.
Senior actuaries are responsible for insuring the firm and they are also responsible for managing the risk of negligence within that firm.
Actuaries can get further advice from the Institute of Actuaries of Australia.