Your shop window to insurers – How to use it effectively – Part 2
Read Part 1 for Brian’s expert tips on presenting your practice effectively, the best approach for non-core work, and what to include on risk management.
Want to understand the whole process? Read “The Art of Underwriting – How insurers price for your practice”
Part 2 now takes us through a best practice approach to preparing the PII proposal form.
The proposal form
We encourage including supporting documentation with the proposal form that you complete, but it is also incredibly important to ensure that you complete this form along with any applicable supplementary questionnaires with due care and attention. Firstly, we recommend the completion of these forms electronically wherever possible. This will help guarantee that the presentation is clear for the underwriter(s) who will be assessing the detail contained within it.
Check your sums!
Make sure that you answer all of the questions that are applicable to your practice. This includes providing any of the supporting information or answers to questions that the form specifically requests should be included. Double checking that your work split adds up to 100% is also important. Underwriters will have to transfer this information into a pricing tool that has been designed by their actuaries. If your work split does not add up to 100% you are effectively wasting their time! This will stop them from being able to establish the base line price for your risk in order for them to undertake their risk assessment. Naturally if you waste someone’s time, that is not going to enhance their perception of your practice and could be reflected on any terms offered, if at all.
Claim summaries and open matters
If you are planning on undertaking a benchmark of your current Professional indemnity programme, then you should include up to date claim summaries that are no more than three months old in advance your renewal date. If you have changed insurers multiple times your current broker is still able to request these on your behalf with an authority letter to save you time so that you can focus on fee earning or running your practice. A lack of up to date claim summaries will result in alternative insurers providing an indication of terms rather than a formalised quotation. This will then be formalised once they can verify this information found on the updated insurers claim summaries. If you have experienced claims, the figures must be up to date in order for you to comply with your duty under the Insurance Act. Having up to date figures has an increased importance for underwriters if there are any open circumstances or claims. If open matters have no reserve, provide your view on both merit and quantum so that they factor this into their underwriting rationale.
Check your shop window
In addition to reviewing the presentation that you prepare, we know that prudent underwriters will look to access and review all readily available information. It is incredibly important to ensure that you do not have any discrepancies in your presentation, this means your website and what the Law Society list as the areas of practice undertaken at your organisation. Advertising areas of law on your website or incorrect areas of practice listed on the law society entry that are not identified on the Proposal form can put off underwriters putting terms forward. They may think that you are materially non disclosing information – especially if missing detail is from the higher risk areas of law. Whilst insurers acknowledge that websites are primarily there to promote enquiries they do expect to see that the information contained on the website correlates with your presentation. Equally, over-elaboration on your website can also reflect badly.
We highlighted earlier in this article, your duty of disclosure under the new Insurance Act, in light of this it may well be prudent to undertake a google search of your practice name prior to submitting your presentation. Especially as we know that a prudent underwriters will do this, so it’s imperative that you provide an accurate picture. If anything negative appears on a search, it would be far better for you to bring it to the attention of underwriters. They are human and appreciate that things happen in business and sometimes these are negative. They do however expect honesty and transparency. Underwriters are generally much more forgiving of an issue that has occurred historically if they were advised about the situation rather than finding it through their own enquiry.
It is important to note that the SRA do list the results of their findings and decisions that they may have made.
In the current insurance market conditions, we recommend that practices begin their renewal process earlier than they have recently become accustomed to doing so. Whilst there is still healthy competition from the participating insurers you want to be in a position that all appropriate insurers have the time to review your presentation. This ensures that you do not miss out on available competition due to leaving matters to the last moment. I suggest allowing a minimum of a 6 week lead in time in advance of your renewal date.
Can we help?
We hope that this series of articles has been helpful. For further support and guidance on how we can assist your practice in preparation for your forthcoming renewal, or to explore the available insurance market place on your behalf please contact myself or your Lockton representative.