Continuing our series on the IFA’s guide to Professional Indemnity insurance, Daniel West of Apex Insurance looks at the implications of Covid-19 on adviser firms’ insurance considerations with particular regard to professional indemnity renewal.
During these very uncertain and somewhat challenging times, I cannot emphasise enough how important it is, now more than ever, to review your Professional Indemnity insurance, especially if your policy is shortly due for renewal.
What is the FCA position on Covid-19 and the PII renewal process?
The FCA have recently stated there are no indications that Covid-19 has prevented underwriters from renewing professional indemnity insurance. Following discussions with the International Underwriting Association, Insurers, and Brokers, they believe PII cover remains available in the market and that the current crisis is not preventing insurers from undertaking the renewals process:
“Our position remains that firms need to have PII policies in place in accordance with our rules to support their ability to meet liabilities as they fall due and to protect their consumers. It is ultimately a commercial decision for insurers about what cover they will offer including cost and on what terms. But they need to meet their regulatory obligations, including when manufacturing, distributing and writing a contract of insurance.”
We have spoken with many of our IFA clients regarding the renewal process and have decided to answer some of the most common questions below:
When should I start my renewal?
We suggest you begin your renewal process at least two months prior to the renewal of your policy.
We understand it is quite common that some insurers may not wish to release terms more than thirty days prior to the renewal date. However, this does not mean you have to submit your application within these timescales. Allowing your broker and insurer enough time to fully review and assess your proposal will enable them to consider all potential risks and allow your broker to challenge any possible increases in premium or excess, and/or restrictions in cover.
How can I make my presentation more attractive to insurers?
When deciding whether to offer cover, an insurer will take many factors into consideration.
It is incredibly important when advising of claims or ‘potential’ claims that you provide as much detail as possible. What were the circumstances? Has the claim been settled? And has anything been paid out. I would suggest you request a formal ‘Confirmed Claim Experience’ document from your broker/insurer if possible and advise of any policies/procedures you have put in place to mitigate any potential future occurrences.
- The Proposal Form
If you provide an insurer with a poorly completed proposal form, one which is lacking in information and/or is difficult to comprehend, the insurer is likely to refuse to offer terms.
Another example would be where your existing broker has only asked for a short one or two page declaration rather than a full proposal form. If there is not enough information to make a prudent and well assessed appraisal of your risk, why would an Insurer want to provide cover?
- Be Fully Transparent
I know it goes without saying that you shouldn’t deliberately omit information from your proposal form, but on occasion it’s not uncommon for someone to innocently fail to provide information that may be a factor when reviewing the presentation. If the renewal of the PI is delegated to another employee of the firm, which is very common, we ask you take a moment to review the presentation before it is presented to your broker or insurer. A second pair of eyes cannot do any harm. If you are ever unsure as to whether something needs to included, note it on the proposal and make relevant comments. It is better to provide more information, than not enough.
We believe presentation is key in the current market and like to ensure all the relevant forms are completed prior to submitting to insurers. This way the process will be much smoother for the underwriters as they will have all the information they require, rather than having to keep requesting further details.
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