FAQ

• + - Does the PLF offer a financial reward for firms that maintain PLF excess coverage?

  Yes. Firms that renew their PLF excess coverage are eligible to receive a continuity credit of 2% for each full calendar year of continuous PLF excess coverage, up to a maximum total credit of 20 percent off the standard rate.

• + - Do new firms receive a discount toward the cost of excess coverage?

  Yes. Depending on the circumstances, new firms with limited or no prior acts coverage will receive a discount of up to 50 percent.

• + - What coverage limits can a firm apply for?

  New firm applicants can apply for up to $1.7 million in coverage. After a firm has maintained $1.7 million in coverage for one full calendar year (with the PLF or another carrier), the firm can apply for coverage up to $4.7 million. A firm will need to have excess coverage at the $4.7 million level for two full years (with the PLF or another carrier) before applying for $9.7 million in coverage.

• + - What do “reinsurance” and “assessability” mean?

  Reinsurance is the way insurance companies pass on some or all of the risk to bigger financial entities. Reinsurance is not necessary for the PLF's Primary Program, as the limits of coverage written ($300,000) are relatively small and the number of participating attorneys (7,350) is relatively large; any shortfall in revenue in one year can be made up by an increased assessment the following year.
  
  When the PLF offers aggregate excess limits up to $10 million, the financial risk from unexpected claims becomes significant. Because of the scale of these risks, the PLF reinsures its Excess Program with top-rated reinsurers. These reinsurers have reserves of several billion dollars and can be relied upon to reimburse the PLF for any excess losses. The cost to the PLF for its reinsurance is fixed and cannot be increased due to losses. This gives the PLF Excess Program the financial strength and stability it needs to take on large risks.
  
  Even though the Excess Program is 100 percent reinsured and holds a significant cash reserve against unknown contingencies, the PLF Board of Directors and the OSB Board of Governors believe it is appropriate to make the Excess Program assessable against Excess Program participants, just as the PLF's primary fund has been assessable against all Oregon lawyers since 1978. While the possibility of a supplemental assessment against participating firms is extremely remote, the two boards believe assessability is the best way to show Oregon lawyers who do not participate in the Excess Program that the Excess Program is financially independent of the PLF's mandatory, primary fund. With assessability, there can be no cross-subsidization of the Excess Program by the primary fund, and vice versa.
  
  We believe the assessability feature, being 100 percent reinsured, and the PLF's capital surplus, is a real strength, as it assures Oregon lawyers who participate in the Excess Program that all excess claims will be paid.
  
  A supplemental assessment would be required among Excess Program participants only if (1) there were significant excess claims in a particular year, (2) the reinsurers failed, and (3) the Excess Program was unable to make up any losses through its surplus and regular excess assessments in future years. The chance of all these circumstances occurring is exceedingly small. Just as there has never been a supplemental assessment for the PLF's mandatory, primary fund in over 30 years of PLF operations, it is unlikely there will ever be a supplemental assessment for the Excess Program. Our excess claims experience over the past twenty years has been good, and we utilize established, financially viable reinsurance companies.

• + - Is there any risk that the PLF’s mandatory primary program might subsidize the Excess Program?

  No. As explained above, the Excess Program bears all of its own costs and is not subsidized by the PLF's mandatory, Primary Program. Excess claims are paid by the reinsurers and, if necessary, by the Excess Program’s surplus. The ongoing administrative costs of the Excess Program are paid from the Excess Program's regular annual assessments.

• + - How does the underwriting process work?

  The PLF has adopted a set of underwriting criteria, which are carefully applied to the application and claims record for each firm. Final decisions are made by the PLF in consultation with the Excess Program Committee of the PLF Board of Directors. If a firm meets our underwriting guidelines, the firm is offered a quotation for coverage.
  
  We believe that the great majority of Oregon law firms will meet our underwriting criteria. If it appears that a firm does not meet the criteria, the firm is notified and is permitted to submit additional information in its favor or withdraw the application. If a firm is not accepted by the PLF's Excess Program, coverage should be available from other commercial sources.
  
  Because the PLF's Excess Program is written on an optional basis, we can only succeed if careful underwriting guidelines are applied. In order for the PLF to offer stable, long-term excess coverage, it may be necessary to decline the applications of a few firms that do not meet the PLF’s risk profile.

• + - Does the Excess Program offer prior acts coverage?

  Yes. In the great majority of cases, the PLF's Excess Program offers full prior acts coverage to participating firms. However, the PLF may limit prior acts coverage in certain cases for firms with a previous history of claims or for other underwriting reasons. Prior acts coverage for individual attorneys in the firm is limited to work done for the firm or designated predecessor firm.

• + - What about firm mergers and splits?

  Firm mergers and splits that have already occurred should be explained on the Excess Program Application. In most cases of firm mergers, the PLF is able to offer prior acts coverage to all members of the merged firms so long as underwriting criteria are met. In the case of firm splits, the old firm probably should obtain extended reporting coverage (“tail coverage”) from its prior excess carrier, although it may be possible for the surviving portions of a split firm to obtain PLF excess coverage with prior acts coverage.

• + - Is coverage available for firms with non-Oregon or out-of-state lawyers?

  In certain cases, the PLF's Excess Program can offer coverage to Oregon-based multistate firms with branch offices or Oregon firms with non-Oregon attorney members. This coverage includes a single aggregate "drop-down" coverage limit of $300,000, subject to a $5,000 deductible. The cost of this drop-down coverage in 2017 is $3,500 per non-Oregon or out-of-state lawyer. However, the PLF can only provide this coverage if the size of the branch office is small relative to the Oregon offices. Coverage for branch offices is possible only in certain states.

• + - Is "innocent partner" coverage available to cover potential claims not disclosed on the firm's application?

  Yes, under certain circumstances. If an attorney knows of a potential claim but fails to disclose it on the firm's application, the attorney will have no coverage for the claim. However, so long as the firm has circulated the application or a Firm Attorney Questionnaire for verification among all firm attorneys before submitting it to the PLF, there will be excess coverage for those attorneys who did not know of the potential claim if a claim subsequently is made.

• + - Does the Claims Made Excess Plan contain additional exclusions?

  Yes, although many of the exclusions in the Excess Plan are similar to the exclusions in the primary PLF Claims Made Plan, the exclusions have been modified to apply to the Excess Plan and should be read carefully. For example, because the Excess Plan is issued to law firms rather than to individual attorneys, the exclusions were modified to clarify which ones apply to all firm members and which apply only to certain firm members. Exclusions 22 (Office Sharing), 23 (Excluded Attorney), and 24 (Excluded Firm) are not contained in the PLF Claims Made Plan.

• + - Can the firm pay its PLF excess assessment on an installment basis?

  Yes. Firms may pay their excess assessment in three payments, together with a service charge equal to $25 plus interest of 7 percent per annum on the outstanding balance. We will provide additional details to firms at the time a quote is offered.

• + - What is Extended Reporting Coverage (“tail coverage”)?

  PLF Excess  coverage is issued on a claims-made basis. This means that coverage must be in place at the time the claim is made. Once the coverage period ends, there is no coverage for future claims. Extended reporting coverage (ERC) is a special additional coverage that may be purchased at the time ordinary coverage ends. ERC allows claims to be reported after the end of the coverage period against the limits that were in place when coverage ended. Usually, it is an optional purchase and only allows late claim reporting for a limited period of time.
  
  Under the terms of the mandatory PLF Primary coverage (the basic $300,000 coverage), ERC is automatically issued at no additional cost when an attorney ends coverage. Nor is there a time limit on late reporting of claims. PLF excess coverage works differently. When a firm does not continue PLF excess coverage it has the option of purchasing excess ERC. That election must be made within 30 days after the excess coverage period ends. Excess ERC may be purchased for periods ranging from 12 to 60 months. Firms only become eligible to purchase excess plan ERC after two years of continuous excess coverage with the PLF. For more details, please see Section XV of the Claims Made Excess Plan.