Professional insurance: the BMIF and regulatory requirements
- There is a regulatory requirement for you to have adequate insurance (taking into account the nature of your practice): see rule C76(1) of the BSB Handbook. There is guidance at gC114 but it does not really elucidate what is meant by “adequate”.
- You must obtain insurance from the BMIF in order to practice (rule C77 of the BSB Handbook) so you should be in touch with the BMIF in order to obtain insurance immediately on starting practice.
- Early in the calendar year each year the BMIF will send round returns to complete. It is very important that these are accurate as inaccuracy could cause your insurance to be invalidated. The returns require you to categorise your income from the previous year. If you are in serious doubt as to the correct category for a case the BMIF can advise. The insurance runs from 1 April to 31 March every year. You are required to pay the BMIF promptly and to provide the BMIF with the information it requires: see rule C78 of the BSB Handbook.
- The amount you pay to the BMIF is worked out as a combination of your risk profile from the work you do and the amount you earned in the previous year.
- You must have minimum cover of £500,000. The maximum you can obtain from BMIF is £2,500,000. The BMIF will tell you if the amount which you are required to pay entitles you to a level of insurance higher than £500,000 up to £2,500,000.
- Insurance is available in excess of £2,500,000 from private insurance companies and a quote can be requested when you fill out your BMIF return. The Bar Council has service partners who may offer advantageous terms. It is surprisingly inexpensive, particularly when you take into account that it is tax deductible.
- It may seem improbable that you will be involved in such high value cases in your early years of practice, but do be careful to keep an eye on your potential liability in any given case. You can easily find yourself involved as a junior in cases with surprisingly large financial implications.
- Top up insurance can also cover you for matters not covered by BMIF, e.g. fines in respect of data protection failures. (Data protection fines can be substantial: we have heard of six figure sums being ordered in cases where DP rules have been breached, and fines can be imposed, for example, for having medical records stolen from a locked house or the boot of a car).
- You may wish to increase your insurance in order to cover yourself for a particular case. This can be done mid-year. Your chambers may have negotiated a collective discount for private insurance.
If you have been notified of a claim, even informally, notify the BMIF straight away. DO NOT bury your head in the sand. This could lead to a position where the insurance is invalidated. Being notified of a claim does not mean that you have been negligent and even the best barristers make mistakes. The claims handlers are sympathetic. It is likely that senior members of chambers will be willing to offer you support and some will even share their mistakes with you too.