ABOUT LEXON

Operating since 2001 as a wholly owned subsidiary of the Queensland Law Society Inc. (QLS), Lexon Insurance Pte Ltd (Lexon) is a captive insurer providing professional indemnity insurance to QLS members in accordance with the terms of the Queensland Law Society Indemnity Rule 2005 (Qld). Lexon insures almost 2,400 law practices, each of which has at least one office or resident principal in Queensland. These 2,400 practices comprise over 7,750 Queensland PC holders and 800 interstate practitioners.

In addition to its primary role of providing the compulsory ($2M each and every claim) professional indemnity cover required by each practice, Lexon also offers optional top up cover (to a maximum of $8M) for those seeking greater insurance protection based on their individual needs.

Lexon’s incorporation in Singapore delivers significant savings for the profession in terms of regulatory compliance costs. Lexon’s board has nonetheless elected to measure its solvency against key Australian Prudential Regulatory Authority (APRA) standards – some of the most robust in the world – with all related actuarial work being undertaken by leading Australian firm Finity Consulting Pty Ltd. Lexon is also an Australian resident taxpayer.

Our Purpose

The performance of the insured profession during 2021/22, in the face of ongoing COVID challenges, was both pleasing and surprising. After an unexpectedly robust 2020, we saw turnover for the insured cohort in 2021 grow by around 15% to some $2.72B. This was the largest year on year increase we have seen, driven by phenomenal growth in the conveyancing and commercial areas.

Growth of this magnitude brought with it a heightened risk of claims from practices being spread too thin and thereby “over busy”. As the profession’s insurance partner, Lexon was cognizant of this issue and provided focused messaging as part of its risk management strategy for the year.

Lexon prides itself in being an industry leader in risk management. The tangible benefits delivered in past years encouraged us to continue the expansion of our award winning program during 2021/22. We now invest over one third of our operational budget into risk initiatives – a commitment unmatched by our contemporaries in other jurisdictions – which has helped achieve the impressive claims performance we now see from the profession.

Financial Highlights

Lexon’s financial performance is largely driven by outcomes in two key areas – claims and investments. 2021/22 delivered an outstanding claims expense of $7.9M (against a budget of $19M) which provided a robust buffer against investment losses (realized and unrealised) of $6.5M for the year, some $10.8M short of budget.

Operational expenses remained 8% under budget, with all major internal projects delivered on time. This was particularly pleasing given the challenges faced during the period, including an office renovation and the roll out of the new QLS renewal system.

Lexon’s overall result was a $1.7M profit, well above budget and an exceptional outcome given the investment volatility. This profit will be reinvested to further support our insured members.

The prudent management of the scheme permitted 2021/22 insurance rates to be held at their lowest levels (save for the special 2020/21 COVID subsidy) since the introduction of the Gross Fee Income model in 2007/8.

NON- FINANCIAL HIGHLIGHTS

The financial management of the scheme during the year is a fundamental driver for the low insurance rates practices now pay. However, Lexon’s relationship with practitioners extends well beyond the financial, with our internationally recognized risk program continuing to improve risk awareness and resilience in the face of new and emerging threats, whilst our claims team seeks to manage claims in a cost effective and sensitive manner.

Workshop Program

The new COVID norm of remote working continued to challenge the provision of Lexon’s flagship risk program in 2021/22. As always, innovation and technology provided the key to ensuring the risk message, and the profession’s needs, were not ignored.

Over the period, we delivered:

Satisfaction Levels

The claims and risk teams are Lexon’s key interface with the profession and their skill and professionalism continue to be hallmarks of Lexon’s overall success.

We regularly monitor the effectiveness of our interactions, and the risk team received an overall favourable response rate from practices visited during the period of well beyond 90%.

A claims satisfaction survey for the period up to 30 June 2022 also delivered a 85.9% satisfaction rate, well above average within the insurance and financial services industries.

Whilst these results are pleasing, we will continue to strive for further ways to improve our service in 2022/23.

Conclusion

In light of the challenges faced in 2021/22, the performance of Lexon has been particularly pleasing. The insurer remains well capitalized and is staffed by an experienced team ready to meet any new challenges that the profession may face.

We acknowledge the support and insights offered by QLS Council during 2021/22 and look forward to continuing our successful partnership into the future.

Online Education Program

We also continued to provide our innovative, bespoke online cyber education program which was accessed over 14,300 times by practitioners and their staff during the year. This has proven to be a valuable tool to further disseminate our key cyber security messages.