As part of its mandate under the Architects Act to protect the public interest, the OAA operates an Indemnity Plan to provide a professional liability indemnification to architectural practices. Ontario architectural practices are required under the Architects Act to carry professional coverage.

The OAA has a clear responsibility to take steps to maximize its capacity to respond to consumer claims. In the past, we have seen serious threats in North America and around the world due to problems caused by asbestos, certain curtain wall systems, toxic mold, phenolic foam, ureaformaldhyde, contaminated soils and Natco clay tiles.

As a result, the OAA Council has decided to put the Indemnity Plan on a more secure footing for the future by asking the Province of Ontario to grant a licence for the Plan to operate as an insurance company. The insurance company will conduct the business currently performed directly by the Association under the Indemnity Plan. This company will be a legally separate subsidiary, wholly owned by the OAA. The Ontario government made a minor amendment to the Architects Act to permit this arrangement.

The move to establish an insurance company legally separate from the OAA is prudent for many reasons. The Indemnity Plan is currently an integral part of the OAA itself; thus, the OAA and its members could be exposed to potential extraordinary losses while at the same time leaving consumers without compensation. We want to avoid the kind of catastrophes that sprang from ‘leaky condominium’ incidents in British Columbia. That disaster caused the BC Home Warranty Program to file for bankruptcy and led to demands from condominium owners for financial assistance totaling over a billion dollars.

When the Indemnity Plan becomes a stand-alone insurance company “for architects, by architects” later this year, the financial exposure of the OAA and its members to these kinds of catastrophic losses will be eliminated. Naturally, the new corporation will continue to provide professional liability insurance automatically to OAA practices upon approval by the Registrar of their right to offer services to the public. The insurance company will operate based on the same principles and goals that the Indemnity Plan always has.

Other benefits of the insurance company structure include an increase in the capacity to contribute to extraordinary losses, greater public protection and confidence and an increased level of comfort among re-insurers.

The transformation to an insurance company is a natural evolution of the Indemnity Plan. It was established in 1987 to recognize the fact that it should be the profession that determines who is qualified to practice as an architect, not an insurance company through its power to refuse or restrict coverage according to underwriting criteria (into which the profession had no input). Nothing changes in that regard with the move to insurance company status; the new company will still be providing indemnification “for architects, by architects”.

The new corporation will re-invest in Ontario architects through various means. Any excess of revenues over expenses and required reserves will continue to be re-invested in Ontario architects through plan credits, education and research.

The new insurance company will benefit from the more than 15 years experience of the Indemnity Plan. It will be led by board members selected for their knowledge of, among other things, architectural practice and insurance. The experienced staff that have administered the Indemnity Plan will continue as employees of the new insurance company.