With 1 October just a few months away, it will soon be time to begin the renewal process for professional indemnity insurance (PII). Market commentators are predicting further premium increases this year and with so many firms flooding the market at the same time, it’s even more important to make your business stand out from the crowd as a good insurance risk. Here PII expert Mark Bracher of Jelf Professions gives an insight to the open market and to what insurance companies look for when underwriting law firms. He offers 10 valuable tips on how to get the best premiums in an increasingly expensive insurance market.
1. Ensure your proposal form gives the right impression. PII is not an exact science and an Underwriter will form a view on the quality of a business, not just from the information on the form, but also from the way in which the form has been completed. The form is a presentation of your business to the insurance market. Frequent spelling mistakes, questions not answered or illegible handwriting make a firm appear sloppy, lacking attention to detail and therefore an unattractive insurance risk. Investing some time ensuring that the proposal form gives a good impression of a business is important. Some large firms even have their PII proposal professionally bound and labelled to help create the right impression.
2. Include a Partner statement. A positive introduction and short overview of the business, written and signed by a Partner can be a good way of setting the scene.
3. Explain any large claims. If you have a large claim/s, don’t rely on a standard print out sheet to give a satisfactory explanation. Your current insurer may already have full details, but that won’t help any other insurer being asked to quote. Give some background about the claim/s and some assurance on actions taken to avoid a recurrence.
4. Make sure insurers know about all the good stuff. If you spend time and money on risk management and improving quality, make sure your insurer knows about it. This could be overlooked if presented wrongly and not fully reflected in your premium.
5. Plan your renewal strategy early. Ask your broker for their current view of the solicitors PI market and their plan for handling your renewal.
6. Maximise competition. With a limited number of Insurers available to most of the legal profession, no quotation opportunity should be missed or wasted. It’s important an insurer doesn’t feel they’re being asked to quote merely as part of a broker’s standard approach to every market. If they are to put forward their very best premium, they must feel confident they have at least a reasonable chance of winning the business and that they are not wasting their time.
7. Match the right broker with the right insurer. The PII market is not a level playing field. Some brokers have stronger relationships with certain insurance markets and are often able to negotiate a better price. Your broker is critical to achieving the best the market has to offer, so establish which markets they intend to approach and whether they enjoy a preferential relationship. Also, be sure you ask which markets they won’t be approaching and the reasons why. The latest list of Law Society approved insurers can be viewed online at www.lawsociety.org.uk
8. Drive your Broker/s. Brokers and insurers are all flat out during September so aim to have your renewal terms and alternative quotations available in August. Within reason, ensure that timings for the renewal process are pre agreed, clearly understood and stuck to.
9. Review the adequacy or the necessity of your level of cover. Insurance rates rise and fall and so a flexible approach to the level of cover purchased above Law Society requirements is sometimes needed. Instruct your broker to obtain a range of limits so that cost and risk can be fully considered by the Partners and you have the option to adjust the level of cover if necessary.
10. Meet your Insurer. This can be set up by your broker throughout the year (apart from August or September). This can help you establish a stronger long term relationship with your Underwriter.
As always, it is recommended that you consult with an independent adviser to ensure you obtain the best solution for your needs. Talking through your specific requirements and fully understanding the difference between the various type of cover makes good business sense, especially in the current economic environment.
