Factors to consider to ensure you receive the best possible terms from insurers
How is the premium calculated?
The rating of any professional indemnity risk is a complex process. Underwriters require a significant amount of information to enable them to provide a quotation which accurately reflects the risk they are pricing. Premiums are calculated based on many factors which will include:
- The claims history
- Categories of work undertaken
- The number of partners or directors to staff ratios
- Firm’s fee income
To assess the risk the underwriter will require a fully completed proposal form which they will consider in detail. They will also look at the firm’s website or they may even look deeper online into a firm’s background.
Market Conditions
The insurance crisis in the construction sector continued to deepen early 2020 and also spread to other sectors including Accountants, Architects, Engineers, Financial Advisers, Insurance Brokers and Surveyors who have all seen a significant increase in their insurance costs and greater cover restrictions, as insurance market capacity continued to reduce and more insurance companies announce their withdrawal from the professional indemnity market.
It was widely reported that the insurance cost of the Grenfell tragedy was the trigger for the current market adjustment and the markets fear of more major claims relating to cladding and construction. As a result of their fears, many loss-making insurers withdrew from the market, allowing those remaining insurers to apply more restrictive cover and vastly increase their rates.
The Coronavirus pandemic is now adding to the insurance market’s concern as a wave of new insurance claims are anticipated.
A Good Impression Really Does Matter
Risk presentation is more important than you might think. The underwriter is assessing the professionalism and quality of your firm and if the information is badly presented, it may influence their judgement and the premium they offer or they may even decline to quote.
Create the right impression!
When you complete your proposal form, it will be reviewed by an experienced Underwriter. The completed form is a ‘presentation’ of your business to the insurance market, so spend some time making sure it looks professional.
Underwriters will also review your website and cross refer the information online against the information on your proposal form. They use all of this information to judge the quality of your firm.
Risk Management
If you spend time and money on risk management and improving quality, make sure your insurer knows about it. This could easily be overlooked and not reflected in your premium so you may want to add some notes on this subject.
A plan managing the risks arising from COVID-19 is important as prudent insurance underwriters are now requesting detailed information on what firms have done to minimise these additional risks.
Meet Your Underwriter
For larger policyholders, we find meeting the underwriter can have a very positive effect on your insurance cover. P I Professions encourages meetings or arranged calls with the underwriter as this will help establish a stronger long-term relationship with the Insurer.
Explaining claims and reserves
If you have any claim payments or reserves on your record, don’t rely on a standard print out sheet to give the underwriter a satisfactory explanation. Give some background about the claim and some assurance on the actions taken to avoid a recurrence. If the underwriter isn’t given the full story, they will simply apply a negative view and load up your premium or decline to quote.
P I Professions takes pride in way we present your risk to the insurance market to ensure we obtain the best terms and policy coverage available from insurers.