- Professional Indemnity Insurance
The Knowledge
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23rd February 2023“Underwriters need more information on risks than they have ever needed before,” said Donna Hurst, Senior Development Underwriter at Travelers Europe. “In the past, it was not always necessary for underwriters to receive any more than a fully completed proposal form for the majority of risks. Now, what we like to see is a document outlining the firm’s approach to risk and what initiatives they have implemented to mitigate risk. And, where there have been claims, what lessons have been learnt and what changes have been implemented to prevent a reoccurrence.”
Brokers who act early on renewals not only improve their chances of securing the best cover for clients, but also lay the foundation for a stronger long-term partnership with their insurer. This can provide significant benefits as their clients’ businesses change and grow in the future. To present clients in the best possible light with insurers, brokers should help them meet the following criteria when preparing to submit a renewal proposal:
- Start early: Submitting a proposal late in the year allows less time for negotiation with the underwriter and presents the insured as a less attractive risk. “While submitting an early proposal doesn’t guarantee a lower premium”, Hurst said, “it will help a firm find more markets willing to quote.”
- Take pride in the proposal: Ensure it is complete, clear and easy to scan so an underwriter can quickly see responses. James Graham, Director of Professional Indemnity at Travelers Europe, advises firms to also submit a separate document that outlines key elements of their approach to risk management. “By submitting a summary that outlines the firm’s risk management approach and culture, the underwriter is better able to understand the firm, rather than the black and white of a proposal form,” Graham said.
- Go beyond “yes” and “no”: Provide more than the minimum answer required, particularly when it comes to explaining the firm’s management of risk. For example, a firm could elaborate on how they are maintaining supervision and building culture in a hybrid work environment whilst embracing cyber security. “Underwriters like things to be ‘business as usual,’” Graham said, “so we need to understand the risks of any cultural change within the firm.”
- Demonstrate conscientious risk awareness: The root cause of a claim may lurk well below its surface. Graham advises insureds get to the heart of a claim by asking themselves five “W” questions. Why did the claim arise? Why did that problem occur in the first place? What has happened since? What else could be affected? What can we do to ensure it doesn’t happen again? “It ensures the firm delves deeply enough into why a problem happened, identifies the underlying issues and finds ways to resolve them,” he said.
- Think about the long term: Involving an insurer early in the planning stages of changes within a firm can lead to not only more suitable insurance protection, but also to a lasting partnership. Even if the proposal form does not ask about the firm’s future plans, it’s in the insured’s best interest to share them with an insurer. Future plans with insurance implications could include closing a conveyancing department, securing run-off cover in preparation for a merger or acquisition, or expanding into a new practice area. Involving the insurer early can minimise risk and build trust.
“Firms may believe their plans have nothing to do with insurance, but if we find out about the changes too late, we have no time to advise them,” Hurst said. “When we’re aware of what they’re planning, we can help them to manage the risks around it. It leads to a better relationship.”
The information provided in this document is for general information purposes only. It does not constitute legal or professional advice nor a recommendation to any individual or business of any product or service. Insurance coverage is governed by the actual terms and conditions of insurance as set out in the policy documentation and not by any of the information in this document.
