Law Firms advised to be proactive ahead of PII April renewals
For a busy law firm, it is easy to postpone renewing Professional Indemnity (PI) insurance. However, with the hardening insurance market we are experiencing right now, insurers will have a choice of companies to choose from. Renewals of professional Indemnity cover made later in the year – or proposals made now without sufficient information – may result in a sharp decline in options.
Risk information is more important than ever to underwriters. In a soft market, most underwriters only needed a fully completed proposal form for the majority of risks. Currently, insurers need to see financial records for the last couple of years, a current profit and loss statement, and answers to supplementary questions regarding the Pandemic and how the firm has handled the situation both operationally and financially, as well as information on cyber risk and conveyancing. If firms wait too long, they may find brokers have reduced access to markets or underwriters will be unable to respond to their enquiries.
On the other hand, companies that are proactive about renewals improve their chances of obtaining the best coverage, as well as establishing the foundation for a long-term partnership. This can be particularly beneficial as your business grows and changes. Brokers should help insurers meet the following criteria when preparing a renewal proposal to present their firm in the best possible light:
Begin early: When a proposal is submitted late in the year, there is less time to negotiate with the underwriter, which makes the insured a less attractive risk. Submitting your proposal early does not guarantee a lower premium, but it can help you find more markets that will quote.
Present concisely: It should be clear, concise, and easy to scan, so that an underwriter can quickly see your responses. Separate documents that outline the key elements of your risk management approach are also recommended. Explain what procedures you have in place to mitigate risk, identify what lessons you have learned from previous claims and what preventative measures you have taken.
Offer more: Make sure to provide more than the minimum answer required, especially when explaining the firm’s risk management. An organization that worked smoothly during the lockdown for example, might be able to point to its longstanding flexible work policy and the ability to have employees log on to work from home before the pandemic. If your firm is moving to remote work, you should outline how the supervision and systems will change to accommodate it. It’s not unusual for underwriters to want everything to continue as normal, so insurers should be aware of the risks of any change in company culture.
Be conscientious of risk: Claims may be triggered by underlying causes. By asking yourself five “W” questions, you can demonstrate that you tried to get to the heart of the claim; Why did it arise? Why did the problem occur in the first place? What has happened since? What else could be affected? What can you do to make sure it doesn’t happen again? By using this procedure, the firm can demonstrate that it has delved deeply into the reasons for why a problem occurred, as well as identified the issues that led to the problem and has taken steps to rectify them.
Think long term: Including an insurer from the earliest stages of planning a change within an organization can lead not only to better insurance protection but to a lasting relationship. Regardless of whether the proposal form asks about your firm’s future plans, sharing them with an insurer is in your best interest.
Plans with insurance implications could include closing a conveyancing department, conducting due diligence or securing runoff coverage in preparation for a merger or acquisition, or expanding into another practice area. By involving the insurer early, risks can be minimized.
Although your plans may not seem to have anything to do with insurance, if your broker learns of any changes too late, he or she would be unable to advise the underwriters. Brokers who know about what you plan can help them manage the risks associated with it and it ultimately leads to a stronger relationship.
Call our expert team today on 0800 180 4203 for a free tailormade, professional indemnity insurance quote now.