Once upon a time, the entire legal profession in England and Wales renewed their professional indemnity insurance on 1 October. While 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 would not have enough time to pick apart their submissions. Occasionally, they would be fortunate and get ‘washed in on the tide’.
By and large, those days are gone. Now that there is a significant April 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 fraud losses, a risk of little concern only a few years ago. This happy state may not last, and if (when) the cycle changes, you will need to be prepared. The groundwork can start now. Regardless of whether your record is good, bad or indifferent, there are a few ‘warhorse’ tips for completing proposal forms that will always hold up:
Do not tarry – after so many years, you know most of what will be asked by insurers, and you cannot rely on good last-minute deals. Swallow the frog!
Be in control – do not let a marketing exercise get out of hand by using too many brokers. Understand which brokers have direct access to which insurers – that is half the battle. Multiple approaches to the same underwriter will rarely get you a good deal.
Be informed – hot topics (there are always some – currently cyber-readiness and leasehold house sales) are obvious areas where you might be asked for more detail. Doing your homework now could save time later. And ensure you know your responsibilities under the new Insurance Act.
Take care – complete your 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 is not left guessing. Front-load information about any answers that could be seen as red flags – 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 make the underwriter worry about what else does not 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.
Chris Robinson is associate director, professional indemnity, at Howden