Professional indemnity insurance (PII) plays a crucial role in safeguarding businesses and professionals across a number of industries, including accountancy. PI insurance provides protection against financial loss resulting from professional negligence or errors in the delivery of services. As the external environment and business landscape evolves, the PI market has witnessed significant changes, reflecting the dynamic nature of professional services and the increasing complexity of their responsibilities.
The PI Insurance market has experienced notable changes in recent years, fuelled by a number of factors such as economic uncertainty, and the rising awareness among businesses of the importance of mitigating risks associated with their services. As such, the number of providers offering PI insurance has reduced, causing increased premiums and often making it more difficult for businesses to access cover. This is particularly relevant for sectors such as accounting, where there is a risk of errors and omissions resulting in a claim.
We are starting to see the situation stabilising and some premiums have started to drop, which is positive news. It is, however, important to remember that insurers’ appetites remains cautious and there is still a way to go before the market is steady again.
What steps should you take?
If you have a professional indemnity policy that will be coming up for renewal, it is important to consider that you may need to start the process much earlier than previously. The renewal process can take much longer due to the additional considerations that insurers are making, and how selective many can be, so giving yourself plenty of time to prepare and consider your options is crucial.
When premiums are high, it can be tempting to shop around for a better price to use in negotiations with your broker, however this may also have a negative impact on your future insurability. If you repeatedly obtain quotes from a number of insurers, but you stay with your current provider, the market will assume your provider is matching the quotes. Over time this can mean fewer brokers and insurers are willing to offer you a quotation at renewal.
It is also crucial that you are open and honest about your business operations and are prepared to provide more detail than you may have in the past, such as the activity you carry out, examples of contracts and financial information. Again, working with a specialist broker with experience in the market is advisable as they can be sure to gather the necessary information to negotiate the best terms for your business. They will also ensure the policy provides adequate levels of cover for you, avoiding underinsurance and the problems this can cause.
Marsh Commercial is the ICAEW’s preferred partner for professional indemnity insurance. Our policy is designed to protect the specific risks facing ICAEW members, and meets the minimum requirements set out by the ICAEW.
If you are looking for a new quote or your renewal is coming up and you need advice, you can contact the team on 0345 894 4684. For more information visit the Marsh Commercial website.
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