Once upon a time, the entire legal profession in England and Wales renewed their professional indemnity insurance programmes on the 1st October, and whilst law firms with a good record were sought after by insurers, even those with a poor record could cross their fingers and hope that underwriters wouldn’t have enough time to pick apart their submissions. Occasionally, they’d be fortunate and get “washed in on the tide”.
By and large, those days are gone. Now that there’s a significant April renewal season, the remaining October renewals are scrutinised in greater detail by underwriters who have more time to do so. Fortunately, the PII market is still benign despite large cyber-fraud losses, a risk of little concern only a few years ago. This soft insurance market may not last, and if (when) the cycle changes, you will need to be prepared so start the ground-work now.
Regardless of whether your claims record is good, bad or indifferent, there are a few “warhorse” tips for completing proposal forms that will always hold up:
Don’t tarry – after so many years, you know most of what will be asked by insurers, and you can’t rely on good last minute deals. Swallow the frog!
Be in control – don’t use too many brokers. You’ll only get endless phone calls and you won’t necessarily end up with a great deal. Multiple approaches to the same insurer won’t be well received so understand which brokers have direct access to which insurers and try to ascertain how strong the broker’s relationship with the insurer is. A broker who does business with an insurer three times a year is unlikely to secure a better price than the broker who does business with the insurer all year round.
Be informed – hot topics (there are always some with current examples including cyber risk management and involvement in tax mitigation schemes are obvious areas where you might be asked for more detail, and doing your homework now could save time later. And ensure you know your responsibilities under the new Insurance Act.
Take care – complete your proposal form on screen if possible, or in block capitals if you have to do it by hand. Answer all questions, if only with “N/A”, so the underwriter isn’t left guessing. Be proactive about providing additional information where your answers could raise a red flag - large claims, disciplinary issues and similar. And please make sure your numbers add up. Any carelessness here after 17 years of the open market will be frowned upon and will only make the underwriter worry about what else doesn’t add up.
Be funded – your unique insurance arrangements impose a credit risk on your insurer for the period of compulsory run-off cover, so many insurers require cleared funds (or the equivalent) prior to confirming cover. You increasingly have to provide evidence of cover at or before your renewal date, so ensure that your source of funds is addressed in good time.