[3 Minute Read]

When seeking Professional Indemnity insurance (sometimes also referred to as “Errors and Omissions” insurance) for your business, whether at renewal or for the first time, there are a number of considerations to be made, and pitfalls to avoid.

The overriding consideration is to recognise that the Professional Indemnity market is in a state of turmoil. Professional Indemnity insurance is one of the worst performing lines in the insurance industry and insurers and underwriters have been tasked with turning this around. As a consequence insurers have never been more selective in their underwriting approach.

Additionally, underwriters have very limited resource and will naturally focus their time and energy on the cases that look clean, professional, present the least risk (or at least demonstrate that the risk is well managed) and those that they think they can actually win.

To highlight this point, in one of our recent insurer meetings, a new business Financial Lines underwriter likened reviewing his workload to Tinder, swiping left or right depending on the superficial looks of a presentation, and tossing aside the “ugly” ones!

It is clear that it is not a “buyer’s market”, and so when procuring Professional Indemnity Insurance, it is crucial that you present your business in the very best way possible to secure favourable terms. We’ve compiled a few pointers to help you along the way:

Presentability

The standard way to present a Professional Indemnity risk to the market is to complete a Proposal Form. These proposal forms are not short but are a necessary way for the underwriter to assess the risk exposure in a format that they need and are used to.

It is imperative that the form is completed neatly and with care. First impressions really do count here and can actually be the difference between obtaining a quotation from an insurer, or not. If the form is untidy or obviously completely without too much care, what message do you think this gives to the underwriter who is expected to insure the quality of your work or advice?

We would always recommend that a Proposal Form is in typed form, that is easier to read than handwritten, and quite simply looks more professional.

Accuracy of information and digestibility

Ensure that all information provided on the Professional Indemnity Proposal Form is accurate and concise. Questions should be answered in a format that is easy for the underwriter to understand and to quick digest. Try to avoid going over the top with technical terms and try to explain any business processes in layman terms. Whilst the underwriter will have a broad understanding of most businesses and sectors, you want to make sure the information can be quickly understood.

Your qualifications and experience

Some proposal forms will have limited space for certain answers. Make use of additional information fields usually found at the back of a Professional Indemnity proposal form and expand on any relevant information to do with your experience and qualifications. You want give maximum comfort to underwriters that your firm is a safe bet and relevant experience and qualifications certainly help with this.

Insurance broker selection

Ensure that your broker has the relevant qualifications and/or experience in dealing with Professional Indemnity insurance. Professional Indemnity insurance can be complex and you need to ensure that your broker understands the cover, and the market. It can be beneficial to use a specialist Professional Indemnity broker.

Another benefit of using a specialist broker is that insurers may be more comfortable with presentations received from a specialist and might be willing to put forward a more competitive quotation.

Avoid ‘Flooding the market’

Asking lots of brokers for quotes might seem like a good way to “cover the market” and get the best terms possible. But remember that brokers are middle men and will often use the same insurers. So, if you do this, an underwriter may receive your submission more than once from different brokers. This is known as ‘flooding the market’.

Flooding the market will turn many underwriters off as they will realise that the chances of them actually winning your business is diminished significantly if there are lots of insurers and brokers involved. Instead they’ll focus their limited resources on cases they might actually win and are likely to “No Quote” your submission.

Our advice is to select a broker who you can trust and who meets your criteria and work witthem to secure the best terms from the market. If you want to engage with more than one broker, limit the number involved, and try to manage which insurers are being approached.

Only target suitable insurers

A scattergun approach rarely yields the best results in all aspects of business.

Insurers keep a log of historic quote requests and will get tired of seeing the same cases each year. So if they see that they have quoted for your business before and haven’t won your business they will be less inclined to put forward a serious quotation or may simply provide a ‘no quote’.  This can work against you where an insurer’s appetite changes, over say a three year period, and they’re actually now an ideal fit for your business, but they’ve now tired of seeing your quote requests.

We recommend that you work with your broker to only target those insurers who are likely to have a strong appetite for your business at that point in time.

For any more tips on how best to present your business to the insurance market for Professional Indemnity insurance, please contact us on 0330 128 9828 or info@championpi.co.uk