An incredible number of different factors come into play when insurers price their professional indemnity quotes and policies, but a good rule of thumb is that insurance companies will always price up for unknown factors. In the end if you are truthful, organised and have the time and patience to shop around, you can expect to pay less for your policies. Dishonesty, disorder and haste are all likely to cost you more, either up front with a high quote or down the line when a claim comes in.
Tables of Contents
- How is Professional Indemnity risk assessed?
- How should I fill out my proposal form?
- Online presence matters
- Your website is critical
- when you buy your policy
- Your insurance history
- How you react to claims
How is Professional Indemnity risk assessed?
Professional indemnity risk is assessed based on broad pricing ranges developed from proven claims histories in different industries, combined with an in-depth assessment of the unique risks faced by any individual business. By considering both of these elements an underwriter can calculate a premium for any one business. Underwriters work hard to make sure their assessments are in line with that of the company, but in complex underwriting there is still an element of ‘best guessing’.
How should I fill out my proposal form?
You should fill out your proposal form as neatly and diligently as possible to present your business in the most complete and flattering light possible. Your proposal form is the first impression an insurer will get of you, and if the document is hastily scribbled all over, difficult to read, untidy and incomplete it is a huge red flags for insurers and they will err on the side of caution when pricing (meaning higher premiums). Take the time to complete the form and if in doubt, call the insurer or broker to double check what is required. This document could save your business one day.
If you are rude, confrontational or dismissive of insurance when speaking with insurance company representatives, they will be unlikely to go out of their way to obtain the best premium for you, reasoning that you are more likely to behave in this manner with your clients or stakeholders, and also that people will be more willing to sue you in the event of a mistake. Being patient, polite and straightforward with insurance company representatives can make a surprising difference to your quoted premium.
Online presence matters
Once a proposal form is on their desk the first thing a representative will do is google you. They will review as much as they can online to determine what kind of a business you run and what kind of a risk your activities and personal approach present, including checking and considering:
- Companies House (Old business names / activities / bankruptcies)
- Company websites (yours and your clients’)
- Review sites such as glassdoor
- News articles and court records
- Company forums
- Your email address
Companies House is often used to check up on prior bankruptcies or other businesses (a director managing multiple businesses may be considered a greater hazard than a sole director due to split attentions, for example). Social media posts highlight the way the company and its representatives conduct themselves online, as do news articles, court records and company forums, any of which could contribute to a claim. Even your email address can reflect poorly on you. If it’s ‘[email protected]’ it may be worth using an alternate email address to seek quotes.
Your website is critical
Your company website is a common source of information for insurance companies, though it’s understood that company websites might list additional services which are outsourced or no longer offered alongside a business’ ‘actual’ activities. Having said that it’s a resource underwriters use a lot, and since you can be claimed against for your recommendations and your subcontracted work, be prepared to explain exactly what is and isn’t your business’ responsibility, and exactly how your relationship with any partners works.
When you buy your professional indemnity policy
If you’re shopping for professional indemnity last minute, be prepared to pay more. Just like a poorly written proposal form or bad manners, urgent insurance requirements are a red flag. If you need cover to win a contract, insurers will be asking why you didn’t see the need to protect your business beforehand. Insurers will also potentially exclude any prior work you’ve done, or apply a higher premium to cover historic work since professional indemnity is claims made.
Your insurance history
Moving insurers regularly looking for the best premium can come back to bite you over time as insurers realise you’re unlikely to hold a policy with them for more than 12 months. Professional indemnity is especially impacted by this, as each new insurer must take on the risk for all of your previous work. The paradox here is that companies who stay with one insurer long term claims free will often end up with the best premiums. Pick a favourite company and continue to shop around each year, but bring new quotes back to your chosen insurer for comparison and competitive pricing, and it will pay off in the long run.
How you react to claims
Premiums are always going to rise following claims, but the way you reacted to any made against you will determine how much they rise by and how long for. If you can provide insurers with comprehensive details of how you’ve reduced your risk since the claim (changed protocols, new certifications, new safeguards), you can help to keep your premiums as low as possible. Even if you’ve never been claimed against, if you research claims in your industry and can tell insurers how you mitigate the most common types, this can save you significantly.
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