Don’t delay in procuring professional indemnity insurance
3 July 2020: Firms need to prepare well in advance and thoroughly for renewal. Leaving it until the last minute to seek cover could lead to problems and be very expensive.
“The market is much harder now,” says Claire Phillips, ICAEW’s professional indemnity insurance (PII) committee secretary. “In previous years there were more insurers providing accountants’ PII and premiums were comparatively low. The market has changed significantly in the last 18 months and that is definitely no longer the case.”
She continues: “Firms that have a claims history, or that work in areas that are considered higher risk by insurers, may find it is harder to get compliant cover, and generally firms may find that cover is more expensive than last year. It is no longer OK to leave renewals until the last minute and hope that the market for professional indemnity insurance will be similar to last year - it won’t be.”
Phillips recommends that firms speak with their broker about the current market conditions and when they should be approaching insurers to renew. It is likely that this will need to be at least six to eight weeks before renewal. And compliant cover means exactly what it says: exceptions and limitations that take the cover below that required by ICAEW will not do.
Finding a good broker and building a good relationship with them is especially important, says Phillips. “We prescribe which insurers firms must take cover out with, but what we don’t do is specify which brokers firms should go to. The broker’s role is very important. Firms need to make sure they talk to ‘whole of market’ brokers and that their brokers understand their business and are presenting the firm to the insurer in an accurate light. It is vital that the broker tells the right story to the insurer.”