Navigating a hard market: How to prepare for 1 July PII renewals

The Professional Indemnity Insurance (PII) market has been in a difficult position for the past few years. 

As the insurance industry relies heavily on the relationship between client, broker and underwriter the recent challenges caused by the Covid-19 situation has exacerbated this issue, impacting business continuity. 

It is thought that the total losses from Covid-19 could total over a hundred billion pounds. As a result, underwriters are under a wall of pressure, a situation which we have had to navigate to ensure our clients get the result they need. There is also the prospect, if it is not here already, of a recession in the property market and from our experience we have seen that this causes allegations of negligence on the part of surveyors from undervaluation and unfortunately, conveyancers often become implicated in this problem. Although not specific to licensed conveyancers, it is clear that the market is not as healthy as one would wish. In these conditions maintaining strong relationships with your Insurer and broker can help to deliver better results ahead of 1 July renewals and during claims negotiations.

1 July renewal: How to prepare

The 1 July renewal is just around the corner and you will need to invest time in the renewal process. We offer the following advice:

• Talk to your broker early to understand what you can expect from your Insurer with reference to the profile of your particular business.
• Agree a timeline with your broker for submission of your proposal form and ensure that you then provide appropriate deadlines to those in your business who need to provide you with the information that is needed.
• Take time and care with your proposal form and accompanying documentation to ensure it provides the best possible presentation of your business.
• Consider all available finance options. Given the financial pressures created by Covid-19, allow yourself plenty of time to source available options and find the best deal. You may also want to consider funding your premium via the Premium Credit facility, as all businesses are seeking to protect cash flow.

The proposal form is a representation of your business so although time consuming to complete, it is important to spend time on this as if it is consistent and legible, it will result in a favourable response from Insurers. To help Insurers gain an insight into your practice, we encourage you to submit any additional information that demonstrates how your business exceeds its peer group in terms of risk management, such as awards you have obtained or training you have completed.

At renewal you have a duty to make a fair representation of your risk to Insurers. This includes notifications of claims and circumstances. In a challenging market, Insurers and their legal representatives are more likely to scrutinise claims and notifications so do make sure you are prepared if the need to notify a matter arises as failure to do so can result in coverage or reimbursement issues. We advise you to make us aware of any updates to claims that you know have closed or alert us of any circumstances which mean the claim will not be taken forward as the client is now satisfied. In addition, do include a note to inform us of how you are working remotely as we would be grateful to know that business is continuing as normal in light of these unprecedented times.

It is important to send your proposal form to us promptly as this will help our team get the right deal. Importantly for this year, underwriters are asking for clear funds by 1 July, the inception of the policy and this will need to be made in cash or under a premium finance agreement.

Risk Management: Steps to take

In terms of risk management, we understand that the clients of licensed conveyancers are always under pressure, as for many, this is usually the largest purchase or sale that they will make in their lifetime. Due to the difficulties caused by Covid-19 we advise you to ensure that the details of the transaction are made clear to your client and that you take the time to walk them through each stage of the process. If you are in the unfortunate position of making staff redundant, we recommend that you ensure the files they were working on are taken over in a prompt manner and that the history of the transaction is visible and can be easily referred to.  We also recommend changing the system access details of the those who have left the business.

Cyber-criminals are also taking advantage of the current situation and we ask you to be extra vigilant at this time to protect your business from this risk, particularly in terms of client identification. For more information on cyber security and steps you can take to mitigate this risk and maintain business resilience visit our Cyber Insurance webpage.

It is difficult to know how long the current lockdown will last and we are very aware that this will be having a significant impact on the profession. We take this opportunity to remind you that our team of experts are on hand to provide advice and assistance ahead of renewals.