Failure to stipulate Professional Liability Insurance: risks and costly sanctions

Presidential Decree 137 of 2012, also known as the Professions Reform, is a legislative update that has introduced significant changes for some professions, including that of the Chartered Accountant who over the years has seen his responsibility grow more and more and therefore, consequently, the need for greater protection.

Since 15 August 2013 the legislator has imposed the obligation to “take out suitable insurance for the risks deriving from the exercise of the professional activity« to the entire sector of accountants, accounting experts or labor consultants.

THE professional liability insurance coverage has the aim of protecting the professional’s assets and his customers during his activity.

What if a professional does not respect the law? What are the risks?

The risks are indicated in Presidential Decree no. 137 of 2012 and paragraph 2 of the art. 5 clarifies that “the violation of this legislative obligation constitutes the conditions for a disciplinary offense». This means that failure to stipulate a professional civil liability agreement represents not only an ethical offense, but also provides for disciplinary measures.

The body that must deal with the violation of the rule and apply the appropriate sanctions is the Disciplinary Council.

The sanctions that can be charged are:

• Disbarment
• Professional censorship
• Suspension from the profession for a maximum of two years

Why is it important to stipulate it?

Not only for the risk of having one’s professional activity suspended or even being disbarred from the register but also to be able to work calmly, protecting oneself from the risks of the activity itself, covering against non-compliance or negligence such as the loss of documents, money or securities received in custody or due to errors in the accounting records.

Despite the strong risks that failure to comply with this rule entails, there are still many professionals without adequate insurance coverage.

There are various policy solutions on the market and the best choice depends on the objectives of the professional:

• fulfill the regulatory obligation: in this case the professional will be directed to sign up for the cheapest policy proposal on the market;
• protect your assets from any claims for compensation from a customer who believes he has been damaged: in this case the choice of policy will take into consideration multiple factors in relation to the activities actually carried out.

As regards Professional RC, Lokky’s solution stands out for the modularity of the coverage and the wealth of guarantees included in the basic coverage.