QLP’s recipe page How to create the perfect Professional Indemnity Application
12th June 2014
We have all seen the cookery shows on the telly, perfect recipes cooked to perfection (mostly!). Well we can look at Professional Indemnity Insurance in the same light, before we start to cook our recipe, we need to look at the ingredients. There are two parts to the process:
Insurers – come in two flavours, plain (unrated) and self-raising (rated). Each has its own part of the market, plain is usually looking for up to 10 partner firms and typically many rated insurers have limited appetite below 10 partners.
Brokers – again they come in many flavours, including producing brokers who find the solicitors firms, placing brokers who find the insurers and general brokers who do both.
So how do they all mix?
Bigger law firms usually have a relationship with a large broking firm. They agree a fee and the broker will supply all their insurance needs, these are usually long term and established relationships. The bigger (rated) insurers tend to prefer these relationships.
For the rest of us it’s a little more complicated, because in recent years there has been a scarcity of affordable rated insurers looking at less than 10 partner firms the unrated market has risen in importance. We need to be able to separate the good from the rest as buying the cheapest ingredients doesn’t always make for a happy mix.
Unrated insurers carry reinsurance (basically insurance on insurance) and looking at the reinsurers we find that some are rated. This should provide comfort.
Back to the recipe, ingredients are next, no broker has access to the whole market, some insurers will only deal with brokers, sometimes only one broker, solicitors cannot access these markets directly. QLP can, we become sub-brokers to access these markets. For firms the core ingredient for a good PII season is the application form, a fully complete form will give the underwriter a quick way to see if they wants to dig deeper, they will then produce a set of requirements (ingredients) they need to take the matter further.
Fortunately we have a good idea as to these ingredients:
- Application form, fully completed
- Full disclosure of claims history (6 years worth)
- Copy of firm’s headed paper (one sheet of paper)
- Supplementary questionnaires (eg conveyancing) as required
- Firm’s accounts (last 2 years)
- Explanation of any niggles
All bound together in a nice neat bundle. The better quality the application pack the more time an underwriter will take to look at the package.
With all renewals on the same day (it will take time to spread throughout the year) underwriters need to distil the deluge of applications down to the ones they want to offer terms on, the easier we make it for them the better the chances of a competitive quote.
Every year there are thousands of cakes presented, you need to stand out. Of course there are a number of things you must not do, for example, paper the market, send an application to all and sundry, that generally ends in a no.
We know underwriters and their likes, we can tailor an application to a particular market, we can improve chances of success and take all the drag out of an application.
So the motto is clear, ‘Start early to get a reasonable quote’.