Critical considerations around professional indemnity insurance
When did you last review your PII cover?
The Professional Indemnity Insurance (PII) market is changing and it is becoming increasingly difficult, and expensive, to obtain appropriate cover.
You need to have a considered approach to PII. Lockton can answer the why, the what, the how and the when for accountants.
Aside from any good reasons of risk transfer, consumer protection and corporate governance, it is critical that PII is effected in accordance with the regulatory requirements of your professional body.
Critically, the PII effected must be provided by an approved insurer and be compliant with the regulatory requirements of the professional body – ACCA, ICAEW or FCA. For efficiency you must ensure that the primary policy wording is on a civil liability basis (not negligence only). You need to address whether the policy covers fraud, both first and third party?
How and when
Be timely in considering your options. A reputable and experienced insurance broker can assist you from the start – either from first effecting cover or from its renewal. Points to consider include:
start the process in good time – increasingly important as the market ‘hardens’ (ie. underwriters become more selective and increase premiums)
enable your broker to help underwriters understand your business, past, present and future
make full disclosure in accordance with The Insurance Act 2015
disclose any claims matters or issues which may give rise to a claim. Provide insight into ‘lessons learned’
be comfortable with the adequacy of the limit of indemnity and with the accepted level of self-insurance (excess)
discuss need for additional covers to address broader business exposures (eg. cyber liability).
Effecting professional indemnity insurance on the correct basis is a business critical consideration for any accountant. It is important that your broker provides professional and independent advice to support you in making a considered decision timeously regarding an appropriate insurer, policy wording, limit of indemnity and self-insured excess.
Lockton is always available to provide considered opinion and guidance on all the risks facing your business. Find out more now