Professional insurance about public interest (Guest Commentary)

Mandatory requirement not so much an authority to be exercised but an obligation
By Claude Balthazard
|Canadian HR Reporter|Last Updated: 08/14/2012

Since June 1, 2009, all members of the Human Resources Professionals Association (HRPA) who provide HR services as independent practitioners, whether full time or part time, must carry professional liability insurance. The requirement is in the HRPA Rules of Professional Conduct that all members must agree to abide by as a condition of membership.

How did this requirement come about? One could argue it is in the best interest of professionals in independent practice to carry such insurance — the costs of settling any claim would be a serious setback for most professionals.

The counter to this, of course, is professionals in independent practice do not like to be told they have to buy this insurance because they believe they should be able to decide whether such insurance is necessary.

Essentially, if a professional in independent practice is willing to assume the risks of being uninsured, why would the professional regulatory body step in and make it obligatory to carry professional liability insurance? For some, a related question would be: Where does an association get the authority to require members to carry professional liability insurance?

The reason why professional regulatory bodies require members to carry professional liability insurance is the same as it is for just about everything else professional regulatory bodies do — because it is in the public interest to do so.

Indeed, were there no impact on the public of not carrying professional liability insurance, regulatory bodies would not take action — but there is, and that is why members are required to carry professional liability insurance.

Let’s take the scenario where a client makes a claim against a professional, and the courts rule against the professional. The ability of the client to recover court-awarded damages might be limited by the assets of the professional. In this case, the client would be left high and dry and public confidence in the profession would take a hit.

Professional liability insurance is a requirement because “first and foremost, the CA (chartered accountant) profession must meet — and be seen to meet — the highest standards in order to protect the public interest,” according to the Institute of Chartered Accountants of Ontario (ICAO).

Sometimes the argument is made that there is no public interest to be protected in regards to the work done by HR professionals. This is an unfortunate argument — if messing up has no consequences then one cannot be doing important work. We simply cannot argue HR is doing important and impactful work while at the same time arguing that practising it poorly has no consequences.

Sometimes the argument is made on a more personal basis — that whereas other independent practitioners may have some exposure in their particular case, the risk is minimal. Indeed, not all independent HR practitioners have the same level of risk or exposure in regards to professional liability.

But that is taken into account by insurance companies. The cost of professional liability insurance depends on the level of risk. Insurance companies assess that risk by asking questions about the specific practice of the professional. Independent HR professionals with practices that have low risk will pay less than those with higher-risk practices.

For a professional regulatory body to require that members carry professional liability insurance is not so much an authority to be exercised as it is an obligation. Professional regulatory bodies have an obligation to do what they can to protect the public interest within the scope of powers given to them by the government.

Establishing professional liability insurance requirements is exactly the kind of regulation the government mandates and expects professional regulatory bodies to put in place. The Human Resources Professionals Association of Ontario Act gives HRPA the mandate to “regulate and govern the conduct of members of the association in the practice of their profession.”

Claude Balthazard is vice-president of regulatory affairs and registrar at the Human Resources Professionals Association in Toronto. He can be reached at cbalthazard@hrpa.ca or visit www.hrpa.ca for more information.

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