Seven helpful tips for renewing your law firm’s Professional Indemnity Insurance
By Tim Grant, operations manager of Trinity. Partnering with LEAP legal software, Trinity recognises that through the use of LEAP’s practice management software, improvements in security and processes play a significant and important role when presenting and negotiating terms with insurers.
Professional indemnity insurance (PII) is mandatory for any solicitors’ practice. The costs are significant and the time expended on various forms can make renewing it a harrowing experience. Firms often complete the proposal form, send it off and wait for the terms, wondering if the costs have risen or if they will struggle to find cover. However, this doesn’t have to be the case. Through careful planning, you could not only make the process easier but also save money. Below are a few simple steps to consider when renewing your PII.
Start the renewal process early but don’t accept terms too soon
Many firms believe that leaving the renewal process until the last moment will save them money, that insurers and brokers will pull out a ‘deal’ to get the business. However, leaving the renewal to the last minute could cost them more. Also, starting the renewal process early allows time for your broker to help you present a submission that places the firm in the best light. Many brokers will offer an ‘early bird’ renewal to entice clients to renew and protect their business. Often, terms remain as per the year prior, which may seem like a great deal, but is it?
Make use of a specialist professional indemnity broker
With the large premiums often attached to solicitors’ PII, firms normally receive a plethora of invites from insurance brokers offering to quote. However, many are not specialist PII brokers and may not have the experience required to best assist the firm. Using a specialist PII broker could not only save you money but also provide experience on how best to handle a claim in the event of an allegation of negligence against the firm. A misconception is that the more brokers you approach, the better chance you have of reducing your premium. Whilst this may be true for many lines of insurance, it’s not always the case with PII.
Meet with your broker
With many firms still renewing on the 1st October, brokers and insurers can be very busy, meaning that first impressions are even more important when an insurer looks at your submission.
Spend time on your submission – it could save you thousands
Many try to complete the process of completing the proposal form as quickly as possible or may leave certain sections blank as they don’t have time to fully collect the information needed; however, you could be costing yourself money by rushing through the process.
Claims and Risk management
Along with the proposal form, insurers require a firm’s claims experience for the last six years which must be dated within no more than three months prior to renewal of the policy. A firm’s claims history has an impact on the costs of the PII – the more paid claims and defence costs incurred, the larger the premium. Did you know that along with fee income, work split and claims experience, the approach and implementation of risk management procedures can affect the cost of PII? Firms with robust risk management procedures and internal systems could expect to see a difference in their PII costs compared to those who don’t implement such measures.
How you are going to pay for PII
Funding PII premiums is often the last thing to be considered; however, it should possibly be one of the first.
Consider other exposures
PII provides security in the event of an allegation of negligence against the firm, although often a source of resentment in the legal profession due to the costs, it is invaluable in the event of a claim. Directors and officer insurance and cyber insurance are two other covers which firms may want to consider.
