Within less than a year after professional third party liability insurance of outsourced accountants was implemented, the number of concluded contracts increased six-fold, however, even less than third part of service providers insured their liability above the minimum limit. It means that the largest part of accounting companies have protected themselves against the risk of minor error only.

Data aggregated by BTA Baltic Insurance Company AAS (hereinafter in text – BTA) indicate that 71% of accounting service providers have insured their third party liability to the bare minimum established by law – to the limit of 3000 euros. Only 29% of service providers have protected themselves from losses that are more significant and concluded a contract with a larger sum. Mostly this relates to comparatively large accounting companies with many clients. At the expense of these companies, the average BTA customers’ policy on mandatory accountants’ third party liability insurance covers the losses of 7214 euros.

Taking into account the operating assets of the companies, the decision made by two thirds of accounting service providers to insure themselves to the bare minimum gives rise to concern, and might fail to cover prospective losses. Error risk minimization becomes vital in these circumstances.

“Professional third party liability insurance of outsourced accountants is like a safety cushion for the accountants. The largest the sum insured, the softer the cushion. However, this does not avert the risk completely. Accountant is still the one to be charge of accurate discharge of one’s duties, and in the course of our day-to-day cooperation, we have frequently heard that a well-considered accounting programme that complies with the requirements of the law is the best tool to avoid errors. In case a company made a decision to save money at the expense of insurance, the programme becomes vital”, emphasizes Viesturs Slaidiņš, business development manager of the most popular accounting and business management system in Latvia - Tildes Jumis.

It is too soon to speak if 3000 euros is going to be enough to cover error-related expenses of accounting service providers.

“The nature of accounting work is all about discovering the losses with a time-lag. Even if now everything seems to be ok, upon the inspection performed by State Revenue Service some incompliance might be established. I think that we will learn if accountants have done a good job this year within few upcoming months, and how much those errors are going to cost”, tells us Director of Insurance Claims Handling Department Kārlis Liepiņš.

As compared to 2016, at the beginning of 2017 the number of the contracts concluded increased three-fold. While on 1 June, when the law on mandatory insurance came to effect, the number thereof increased twice as much.

Third party liability insurance envisages indemnification for financial losses incurred to third parties, which occurred due to accounting error. For instance, penalty fees applied by state or local authorities for incorrect calculations and payment of taxes. Insurance shall cover the expenses occurred due to accounting error, as well as shall compensate the losses for the delayed payments, in case the client’s bank accounts are blocked in the course of proceedings.

About BTA

BTA Baltic Insurance Company is one of the leading insurance companies in the Baltics, offering the broadest range of non-life insurance services in Latvia, Lithuania and Estonia. BTA employs more than 1 000 employees in the Baltics. The largest shareholder of BTA is Vienna Insurance Group AG with 200 years of experience in the insurance industry. More than 50 companies in 25 countries constitute the group, which employs 25,000 employees. Vienna Insurance Group AG is a clear leader in its core markets in Europe maintaining high rating of financial stability – Standard & Poor’s A+ (stable outlook), with a listing on the Vienna and the Prague Stock Exchange.

Additional information:
Elīna Rasmane
Marketing and Public Relations Department Director
BTA Baltic Insurance Company AAS
e-mail: elina.rasmane@bta.lv
tel.: 66936074, mobile: 29374827

Jekaterina Černobrovaja
Marketing manager at Tilde Jumis
e-mail: jekaterina.cernobrovaja@tilde.lv
Tel.: +371 67605001
Mobile: +371 29198543