Getting the Most from Your PI Renewal
The process of renewing your Professional Indemnity Insurance (PI) can sometimes be quite involved. So, if you want it to go smoothly, you must be well prepared. To help get everything on track, here are some practical suggestions from Steven Pollock, Chief Underwriting Officer for Professional Risks at Travelers.
First Things First
Start by putting together a record of all your claims over the last five to ten years; your insurers should provide details of your claims history on request. This information is vital for your prospective underwriter, so be sure to allow sufficient time – ideally eight to ten weeks in advance of your renewal date.
You’ll need to include the following details:
- Date of claim
- Policy year responding
- Brief narrative
- Amount paid as indemnity
- Amount paid as defence costs
- Any amount held as reserve by insurers (if known)
It’s important to explain the background to all significant claims and provide details of any steps you’ve taken to avert a recurrence. If the claim involved a specific individual or a particular office, have you conducted an audit and addressed the issues? If it came about because of a particularly challenging client, have you improved your vetting procedures to ensure there’s no repeat?
Upgrade Your Risk Management
Solicitors are increasingly falling victim to a range of random and targeted cyber-attacks. These include:
- Ransomware that can disable computer and phone systems.
- Theft of sensitive commercial or private client data.
- Client account and social engineering frauds.
Underwriters will obviously want to assess your firm’s IT security measures, but they may actually be more interested in human risk. Expect them to look into your firm’s overall risk management culture and the specific cyber-risk training you give your staff.
Do Your Research
Every year, solicitors are bombarded by brokers offering to reduce their premium. If you’re thinking of engaging one of them, be sure to do your research. How knowledgeable are they about the profession? Do they specialise in firms of your size? What turnaround time will they commit to? Which insurers do they use?
Cheap premiums can be tempting, but you usually get what you pay for. Many insurers have entered the solicitors’ market quoting cheap premiums only to exit within two to three years: think hard before opting for the cheapest price.
You should also consider the insurer’s claims handling capabilities. Here at Travelers we handle everything in house.* Many other insurers put claims out to external lawyers, adding to your costs. Some insurers and brokers provide risk management consultancy, which Travelers offers gratis.
Limit and Excess
The minimum terms cover of the Solicitors’ Regulatory Authority (SRA) is very broad and many firms are happy with the limit of £2m for partnerships and £3m for LLPs and limited companies. But is that sufficient for the size of contracts you’re involved with?
Does the potential exist for a single error to result in multiple claims? If so, they could end up being aggregated together and treated as a single claim. It’s been known for conveyancing firms dealing in low value houses to end up on the wrong end of a multi-million pound action.
The type of work you do matters too. Most PI claims result from conveyancing or personal injury work but your areas of specialisation have an impact on the type of claims underwriters expect to arise. For example clinical negligence obviously carries greater single claim value potential than the more common ‘trips and slips’ claims.
It is sometimes said that you should buy as much insurance as you can afford. Certainly, you need to feel comfortable that your level of cover is commensurate with your exposures. Fortunately, the cost for additional layers of protection tends to be reasonable.
Direct or Through a Broker?
Not everyone needs to renew through a broker and it might save you money to go direct. For example, if you’re a smaller firm, Travelers offers an online system that can make the whole process straightforward.
If you do use a broker, you must fill out a proposal form. In that case, take the time to ensure it is professionally prepared (and proofed). You should also check that any financials are consistent with the previous year’s proposal.
If you’re finding it difficult to arrange cover, speak to a broker or contact the regulator. Some brokers specialise in helping ‘distressed’ firms that are struggling to obtain PI.
Get the Timing Right
Once your renewal terms are ready, clarify timings and be aware that cover must be in place at some point on the day prior to the renewal date (September 30th if your renewal falls on October 1st).
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