Professional indemnity insurance can be confusing and you may be unsure of where to buy a policy from. Whether you're a self-employed professional or you run a larger company, here are the different ways to get professional indemnity insurance in the UK. Read about them to decide which is best for you.
Five ways to get professional indemnity insurance
In the UK there are five common ways to get PI insurance: comparison sites, brokers, direct insurers, agents and governing/chartering bodies. All have their pros and cons. Let's discuss.
Brokers work for their customers. They learn about the customer and their business and then, using their market expertise, survey insurance companies that might be suitable to obtain quotes.
Brokers can be more expensive since they charge a fee for their services, but they offer expertise and an unbiased perspective when comparing offers. For anyone unsure of what they need (e.g., how much PI insurance they need or which companies are good for their profession) a broker can prove invaluable.
A broker works with a set of insurers; before engaging a broker, ask which companies they work with and how much business they do for your occupation.
Large brokers like Towergate work with a large body of insurers and can help most professions find cover.
Word of caution. Brokers do sometimes have deals with specific insurers to deliver a certain amount of business annually. In exchange they gain access to better premiums from that insurer and possible bonus payments to the brokerage. If you feel any concern about the motivations or understanding of any of the businesses they use to obtain PI you should trust your instincts and not be afraid to ask for copies of their proposal forms (if you don't have a copy) and all the notes/correspondences on their broker file/account—this is a legal obligation of the broker if it is phrased as a 'subject access request' under GDPR regulations.
The broker will need to provide all relevant information within 6 weeks (another reason why it's good to seek cover early). Then, you can take all of that information and move to another broker or insurer with it, picking up where you left off with another company.
2. Direct Insurers
Direct insurers like Hiscox, Direct Line and AXA sell professional indemnity insurance directly to customers, with no middle men. This can help to keep costs down.
But the main benefit of dealing direct is perhaps that if they tell you anything and you have it in writing, it's straight from the horse's mouth—you can't get closer to the underwriter. What they say their policies covers is exactly what it covers. You can explain your business from your expertise and explain exactly how you differ from 'all the other' people in your profession, and get a much more bespoke service and coverage.
If you decide to go direct, it's a good idea to check prices with multiple insurers before buying a policy to ensure you don't overpay. PI insurance costs can be much higher from one insurer than another, depending on their pricing models and risk appetites.
3. Comparison Sites
Comparison engines can help connect customers with multiple insurance providers. A perk of using this method is that you fill out only one quote form to get started and the system can connect you with multiple providers—this may be a mix of brokers and insurers.
Comparison sites can be a quicker way to get multiple quotes than contacting brokers and direct insurers one by one. Comparing prices with multiple providers is very important for professional indemnity insurance, since PI insurance quotes can vary a LOT from one provider to the next. If you'd like to give this method a try, click here to compare Professional Indemnity insurance quotes. Other sites with PI comparison include QuoteZone and Simply Business.
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The disadvantage is that in order to get quotes from multiple insurers, comparison sites can oversimplify or over generalise certain professions because they ask only the questions common to a majority of insurers. However, Professional Indemnity policies in particular are very bespoke to insurers.
It's ok to get policies through comparison sites and they are a great starting point, but you should always speak with the insurer if possible to make sure the policy will work for you. If you ever get a quote that looks good on a comparison site, call the insurer to confirm it's right for you. You can always go back and accept it through the comparison site if you want to support them.
4. Insurance Agent
Another category of insurance provider is called an 'agent'. Agents work directly for insurers and usually cover a niche target market—for example, at a farm show selling farm insurance. This agent would have a stack of proposal forms which are specific to farmers and they will have a detailed knowledge of farm insurance. They literally just sell the one or two specific covers and act as product experts. Through agents you can often access schemes as mentioned above, and you can be sure they've seen enough farm policies and sold to enough farmers that they know their onions.
MGA's (Managing general agents) are like the above but they tend to cater to a broader range of clients and businesses. An MGA allows an insurer to dip their toe into industries whilst limiting the risk of big claims driving the main business under, because the underlying insurer can leave the MGA, usually at very short notice. This forces the MGA to find underwriters elsewhere.
5. Governing or Chartering Bodies
Often governing/chartering bodies or educators will run their own 'schemes' where they sell bulk policies that are tailored to the needs of their members. Depending on your line of work you might only ever encounter PII in this manner (e.g. beauticians very commonly buy PI through their educating body unless they are doing something novel. This is often a modified medical malpractice cover and can be offered comparatively cheaply because it's sold in bulk, whereas buying such cover through a broker can be exorbitantly expensive).
Is it better to use a broker or a direct insurer?
There are pros and cons to each. The main differences between brokers and agents are that:
- Brokers work for the client; agents work for the insurance company
- Brokers can supply insurance policies from many different insurance companies
- Brokers charge fees to their clients; agents are paid by the insurance company they work for
Generally speaking, direct insurers can be better at insuring those with a low-risk business and quite simple insurance needs; they may not offer cover to higher-risk professions, for high limits of cover or for more complicated situations.
'Emerging' professions such as those that have come about through tech and 'soft' consultancy booms have a much easier time finding cover. While there are always exceptions, emerging professions see steady, regular claims of a predictable cost range for the most part, so might be well suited to buying direct from an insurer.
Brokers are valuable to help sort out PI insurance for those in professions that are viewed as higher risk, for whom PI insurance is quite expensive and for those having trouble finding cover. These are often 'traditional' professions such as finance, architecture, surveying, construction, etc.
Part of the reason that these traditional professions have a harder time getting affordable PII is due to the loss ratio volatility associated with those professions. For example, construction tends to see few claims in general but then one massive claims year when there's a disaster or a legislative change (FCAs and certain pension scheme activities are a less mainstream example of this). That's why traditional professionals might have better luck finding a suitable policy at a good price using a broker.