Due diligence and professional indemnity insurance go hand in hand For many solicitors, the 1st October professional indemnity insurance renewal process can cause anxiety because the purchase of the right policy could be fundamental to the existence of the firm. Whilst financial savings are important in these uncertain economic times, the financial standing of your chosen insurer is key for the future security of your practice. It is no surprise to those of us who have been involved in the solicitors’ professional indemnity market for many years to hear the news of another casualty in the unrated insurance market. The insurer in question was Balva, the Riga-based insurer, who insured 1000 law firms and with effect from 1 March 2013 was prohibited from writing new business in the UK by the Latvian regulator. This downfall was also followed by two other unrated insurers. The implications following the failure of this insurer left companies uninsured and with a financial challenge. Prior to 2012, those who operate everyday within the professional indemnity market had never heard of Balva, and had no information on their service or claims handling. This demonstrates the need for research and due diligence, which should be provided by your insurance broker. There have been further fundamental changes in the market since last renewal, where there is an opportunity to influence renewal dates going forward. On 1 October 2013, insurers will have the option to offer policies for periods longer than 12 months. This should help to promote flexibility for law firms, reduce congestion, and allow underwriters more time to accurately reflect the risk. The renewal process itself can be daunting for many and early, detailed preparation is key for a satisfactory conclusion. Insurers will scrutinise the information presented and we urge you to: • provide clear information on risk management procedures, claims history, work-split and practice profitability • complete your proposal form as comprehensively as possible and ensure all information is accurate • emphasise positive risk management points about your practice that distinguishes you from your competitors. Good practice will be reflected in the premium • submit your application three months in advance and allow enough time for a potential meeting with the insurer before renewal.
The message here to firms has never been clearer; ensure you seek chartered advice from professional indemnity insurance brokers, and choose a rated insurer who has the knowledge, expertise and financial strength to support your insurance needs. For more information about our professional indemnity policies, please call us on 029 2085 5240 or visit www.thomascarroll.co.uk. Gareth Cotty ACII Director Thomas Carroll (Brokers) Ltd