How seriously do you take risk management? How effective is your firm at dealing with potential problem areas in a prompt manner? If you’ve had claims in the past, to what extent have you learned from your mistakes? In all professions, these three concerns are what insurers tend to take into account when deciding whether to grant PII cover and when determining the level of premium to charge.
Before you begin your search for cover, preparation is key. Here are some areas to focus on:
Think about what insurers are looking for.
For solicitors, accountants, financial advisors and many other professionals, the pressure is on when it comes to professional indemnity insurance cover.
You cannot do anything about the state of the insurance market, but you can at least aim to present yourself in the best possible light to potential insurers. Prepare in the same way as you would for a pitch to potential clients or investors; by highlighting the positives and by having answers on-hand to the questions that are likely to arise:
Your claims history.
Past claims need not be an automatic barrier to an offer of cover. Avoid attempts at obfuscation: give full and frank explanations of how the claim arose and the steps you have put into place to avoid the same thing happening again. This may include a strengthening of internal reviews, a system of sign-offs and a more effective client management system.
Your client documentation.
Claims can often centre around a misunderstanding or miscommunication based on the difference between what the client thought you were going to do – and what you actually did. As such, potential insurers are generally keen to see the standard documentation you use to define your terms of service. This includes not just your service contract but also your accompanying terms-of-business letter and all other client care-related documentation. More generally, does the documentation you produce in the course of your dealings with clients provide a clear paper trail? Are you producing the quality of file notes and attendance notes that could be relied upon in the course of responding to complaints or defending claims?
To some degree, mistakes are inevitable but you can at least minimise the chances of errors by ensuring that your staff get the training they require. For trainees and newly qualified staff especially, insurers will be keen to satisfy themselves that the monitoring and appraisal system you have in place isn’t simply a tick-box process. Is work being actively checked before being sent out or is it merely “signed off”?
For all staff, are you maintaining up-to-date CPD records to keep up with ACA requirements? Where appropriate, are partners and associates encouraged to join ACA special interest groups? All of this can help to show an insurer your ability to keep on top of current developments to reduce the chances of being landed with claims arising out of the provision of out-of-date advice.
You attitude to compliance.
From money laundering through to data protection, an insurer will be keen to check that you take a robust approach to compliance. You may even wish to consider having your existing processes independently reviewed to demonstrate your commitment to best practice.
Your fee income
Insurers will look closely at your income over the last few years as well as your projections for the coming year. Steady growth is a positive sign. A sudden drop in income may be seen as an indication of an underlying issue within the firm. An upward spike is likely to raise questions too: for instance, are you taking on more work than you can handle – and cutting corners along the way? Be ready to explain any unusual movement in fee income levels over the last few years.
Get specialist advice – and get it early.
By instructing a specialist broker such as Bluefin Professions at an early stage, firms have the potential to take away much of the stress involved in securing cover. What, specifically, are you lacking at present that’s putting policy providers off your firm? How can that problem be rectified? A specialist broker should be able to help you to answer these questions and make sure you get the right cover – without a last-minute scramble.