The Value of a Reciprocal

A reciprocal insurance exchange, simply also called a reciprocal, involves a group of members setting up and funding an insurance company. Each member of the reciprocal, or Subscriber, assumes part of the risk of the group. When a claim is submitted, the losses are covered by all the Subscribers.

The value of a reciprocal includes greater control for Subscribers over the coverage offered, management of claims and operating costs. This allows the Subscribers to tailor the coverage based on their specific needs. In the case of law societies, to provide professional liability insurance to their members in order to meet their mandate of protecting the public interest.

CLIA is a reciprocal insurance exchange formed in 1988 by several law societies as a direct response to a need for more effective professional liability coverage for Canadian lawyers. By banding together to form an insurance company, law societies were given access to direct insurance markets (akin to shopping wholesale) that would recognize the years of Canadian-specific claims history the law societies had built. Subscriber law societies include:

• Manitoba

• New Brunswick

• Newfoundland and Labrador

• Northwest Territories

• Nova Scotia

• Nunavut

• Prince Edward Island

• Saskatchewan

• Yukon

If you are a lawyer practicing in one of the above jurisdictions, you are insured by CLIA. CLIA issues a master policy to each member law society to benefit its practising insured members. The participating law societies agree on standard limits and policy terms, and each selects a member society retention appropriate to their circumstances. CLIA administers claims exceeding society deductibles and performs a coordinating role.

For more information on the value of reciprocals and how they work, see the article ‘What You Need to Know About Reciprocal Exchanges’ by Axxima.