Semi-retirement and Professional Liability

By Alexis Tertulliani

The new mortality tables recently published by the Canadian Institute of Actuaries reflect the continuing increase in life expectancy that society as a whole is experiencing: we are living longer, healthier, and more productive lives. As this trend continues, a growing number of people will spend almost as many years in retirement as they have spent in their professional career. While some may elect to invest their time exclusively to enjoying retirement, many may decide to take advantage of good health and an active lifestyle to continue providing their expertise, knowledge, and experience as independent consultants.

Actuaries who wish to follow the semi-retirement route are fortunate as the opportunities to provide consulting services, on an ad hoc, part-time, or even full-time basis, are readily available and typically do not require substantial start-up costs nor are they expected to represent significant financial risks. There is, however, one risk that all professionals should consider when transitioning from a retired employee to a consultant: professional liability. As professionals, actuaries are personally responsible for their professional activities and services and are exposed to professional liability lawsuits and claims for actual or alleged negligence or wrongful acts committed in the course of those activities. Lawsuits can happen to even the best professionals; even in cases where no actual negligence is proven, defence costs almost always represent a significant expense.

Professional liability insurance is one of the most effective tools available to transfer the financial obligation of defence costs and legal expenses to an insurer, as well as the burden of selecting and retaining legal counsel and managing the legal process that may ensue. In situations where damages are awarded to a third party, professional liability insurance will indemnify accordingly, subject to the limit of insurance available under the policy.

Professional liability insurance is a fundamental component of any professional’s overall risk management and risk financing strategy, and it ensures that the consulting activities that began as an exciting and fulfilling way to enjoy semi-retirement do not prevent one from enjoying full-time retirement if and when that time comes.

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Alexis Tertulliani is vice-president of risk management and client relations at Dale Parizeau Morris Mackenzie.

Canadian Institute of Actuaries/Institut canadien des actuaires