Risk management

Get an early start

Now is the time to be getting your firm ready for the renewal season.

While 1 September might seem a long way off, it holds true that the earlier you start negotiations with your broker for your professional indemnity insurance, the better deal you will get.

One area that is often left until the last minute is the co-ordination of notification of claims and circumstances already levelled at your firm.

An insurer will want to see not only the notifications made against the firm in the last year, but how well you managed your claims records in previous years (usually six years).

Therefore, if you have not yet appointed someone as your notifications co-ordinator, now is the time to do so.

This person should be informed of all definite and probable cases, which might give rise to a notifiable claim.

Once someone has been given this job, make sure everyone in the firm is aware of the new claims co-ordinator and knows exactly what sort of information that person requires.

Once you have the statistics for notifications in place, the co-ordinator should be able to see exactly where your firm is falling down.

It is often a particular area that is causing the majority of the claims.

This could be a certain department - for example, conveyancing, where claims are always high owing to the nature of the work undertaken.

It could also be a firm-wide issue - for example, deadlines being missed as practice diaries are either not synchronised or they are not being properly kept up to date.

However, it could be that all notifications are for completely different reasons, in which case your firm will need to analyse every notification and find out exactly why the problems have occurred.

Once you have this information at your fingertips, do not stop and ignore the facts in front of you.

It is important that you take the first steps to preventing further occurrences in the same vein.

This means risk management.

Analyse all notifications and, with outside advice if necessary, work out what procedures need to be adopted to prevent such mistakes happening again.

An insurer will look more favourably on a firm with good claims experience.

Second best is a firm that understands exactly where its practice is encountering problems and has taken, or is in the process of taking, the relevant steps to prevent the same mistakes happening again.

This article was prepared by AFP Consulting, a division of Alexander Forbes Risk Services UK