PROFESSIONAL INDEMNITY INSURANCE

As we head towards that time of year, when firms have to consider the job of work that is the preparation of their submission for Professional Indemnity Insurance, we thought it appropriate to offer our annual advices, in relation to Professional Indemnity Insurance and to indicate where the market stood.

Our advices are as follows:

1. Prepare your application early. Last minute.com is not a good place to be when you are doing this as a fair body of work will often have to be prepared.
2. We strongly recommend the use of the Common Proposal Form. We have been assured by the Law Society that the new Common Proposal Form should be available from the 9^th

There are reasons why we would recommend the use of the Common Proposal Form as follows:

(a) The Insurers who see the Common Proposal Form know that you are using a general form that can be used with all Insurers and that you are not just going to one Insurer.

(b) While Insurers often offer the short form Insurance Proposal for several years, eventually they will require that you complete the full Common Proposal Form and they will require a very substantial amount of back work, which you could be doing on an annual basis.   I speak from experience.

(c) If you only use short form proposal you are limited to the Insurer that gave  it to you;

(d) The Common Proposal Form very helpfully brings you through all of the items you are agreeing to and you ought to be aware of these.

In terms of who is in the market at the moment, we can advise as follows:

1. The Insurers from last year are remaining in the market.

These would include AIG, Aviva, Berkshire and Liberty for Partnerships and Alliance, CNA and Star European for sole practitioners and partnerships.

2. No new Insurers are expected into the market.
3. The current market will generally, notwithstanding what we stated above, offer the option of using shorter forms. This option may not be offered in circumstances where there is a claims history or there has been a merger or consolidation with another firm.
4. The expectation at this time is that the majority of Insurers will absorb any practice growth of up to 10 or 15 % without a premium change.

Anything above that will be a matter, in each case, for the Insurer to decide.

5. The expectation is that the Insurers will be offering single digit reductions where there have been no claims against the firm in the past twelve months and where growth does not exceed 15%.

If you don’t fall within those parameters then that is a matter of negotiation with your Insurers.

The advice therefore is shop around.

6. Cyber Insurance is obviously an option you should look at but be careful. Cyber Insurance should always be first claim insurance and NOT top-up cover for your Professional Indemnity Insurance.
7. Be aware of any massive difference in quotes for Cyber Insurance and get a written assurance if you are taking Cyber Insurance that it will payout, without the necessity of you having to make a claim on your Professional Indemnity Insurance.

Good luck, as always!

Niall T. Cawley

DSBA President