With the market continuing to harden, sourcing competitive professional indemnity insurance remains difficult. Former underwriter and insurance broker Alex Roebuck shares tips for struggling businesses.
Your renewal quote is in and it’s going to cost a lot more than last year. You’re not alone; professional indemnity premiums continue to rise across the UK, prompting many businesses to shop around for the best rates.
If you’re going to go elsewhere or even shave down the cost of your existing renewal quote, there are a few things you can do to make your business as attractive as possible to insurers:
Know your business, know your risks
Often businesses will delegate insurance renewals to secretaries, admin assistants or junior staff members, but this can be a mistake. The best person to obtain insurance quotes is a director or senior staff member who can answer insurer or broker’s questions accurately and provide further clarification if needed.
Insurers price any uncertainty highly; whoever deals with insurers should be able to dispel that uncertainty. Business activities and responsibilities, turnover breakdowns (past, current and projected), client relationships and project sizes are all critical pieces of information. Due to the hard market insurers are inundated and you may only get the one shot, so make it your best one.
Produce a perfect proposal form
Your proposal form reflects you and your business, and in some cases it’s the only thing an underwriter will see when calculating a quote price. If it’s unclear or there’s information missing, you will go to the bottom of the pile or be rejected outright.
The best thing you can do is to nail your proposal form. Make sure it is as neat, accurate and complete as possible. Include additional information on extra sheets if you think it’s relevant. Show insurers that you know your stuff and they will have faith in you.
Make sure your risk management is top notch
Asking ‘Isn’t that what insurance is for’ is a sure-fire way to turn insurers against you. For example, car insurance is a risk management tool but having it doesn’t mean you should drive down the wrong side of the road at 100mph with no seatbelt on.
Just as car insurance rewards careful drivers, professional indemnity insurance gets cheaper if you can show that you have anticipated and taken steps to avoid potential claims. For example:
● Third party reviews/audits of your work
● Comprehensive internal signoff and audit processes
● Relevant T&Cs reviewed and signed off by legal professionals
● Clear expectations, job specs, review dates and deadlines for clients with clear agreed processes for dispute resolution established from the onset of any work.
● Up to date and relevant qualifications for business leadership and technical experts
By showing that you have done everything possible to protect your business from claims, you are reassuring your insurer that they are taking a ‘good bet’ by offering you a policy – risk aversion and risk management are the routes to discounted premiums.
How to ask for a discount
If you are hit with a high renewal quote, try a few of the following questions rather than simply demanding a discount:
● What can we do as a business to reduce the renewal premium?
● Can I provide more detailed information about my business to help obtain a discounted quotation?
● Can you refer this case to your underwriters for a review / Can I speak directly with an underwriter to discuss my renewal?
The vast majority of customers will immediately rail against any premium increase and then demand a reduction. If you can get some insight into your particular insurer’s pricing strategies, and if you are willing to make accommodations for your insurer, you may well be able to obtain more favourable terms in exchange for some small concessions.
Be nice
Lastly, hard markets are hard – for everyone. Whoever you speak to will have had the same difficult conversation with tens of other business owners that day, possibly thousands in total since the market started to harden.
It’s also likely that they have no control over premiums and that they are just as frustrated and fed up as each of those clients. If you stand out as a pleasant conversation in the midst of all of those other negative experiences, they may go above and beyond in trying to help you. Never underestimate the power of a motivated, experienced customer advisor!
In a nutshell, know your stuff, do your homework and be polite to give yourself the best chance of a competitive quote.
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