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d&o insurance, directors and officers insurance

Maintaining your professional indemnity insurance during Covid-19

The necessary steps the government has taken to slow the spread of the coronavirus outbreak in the UK has undoubtedly had its effect on the business community, with many firms suffering reduced income and facing financial uncertainty.

Clearly, ICAEW members are not immune and it is sadly inevitable that some will be facing financial difficulty, and therefore seeking to reduce overheads.

For some, annual insurance renewals or monthly payments will be cause for concern – there is a clear need to keep insurance cover in place but premium payments may represent a serious strain on already stretched finances.

So, what can those in financial difficulty do to balance these two pressures?

What to do if you are struggling with insurance premium payments

There are two options here, depending on whether you pay your premiums as one annual payment or by monthly instalments:

1. If you pay your professional indemnity and other insurance premiums as one annual payment:

Contact your insurance broker to discuss your situation. Many brokers are working on a case-by-case basis to assist those facing financial difficulty at this unprecedented time. Where possible, an assessment may be made to assess whether premiums can be reduced. Or, help could be provided to set up monthly payments to spread the cost – to ensure you remain protected while reducing the financial burden.

2. If you pay your professional indemnity and other insurance premiums in monthly instalments:

Many premium finance providers have committed to work on a case-by-case basis with those facing financial difficulty. We would encourage you to get in touch with your insurance broker or directly with their premium finance partner to discuss your options. Remember, simply cancelling insurance payments is not advised as this may invalidate your insurance cover, leaving your business exposed to further financial risk.

What to do if you are forced to pause trading

Ceasing cover during a business “pause” could leave you exposed to potentially expensive claims – even historical claims – without insurance cover in place to help with defence costs and compensation. That is because professional indemnity insurance is written on a “claims made” basis, which means that cover must be in place at the time of a claim, not at the time of incident that a claim arises from.

With that in mind, it is very important to maintain your professional indemnity insurance cover even during a business pause. However, it may be possible to reduce or spread your payments as monthly instalments - please refer to the guidance above or get in touch with your Marsh Commercial account handler for further advice.

What to do if you’ve no choice but to cease practicing

We understand and sympathise with any ICAEW members forced to cease practicing, but we would not recommend cancelling your professional indemnity cover altogether. ICAEW policy stipulates that members hold a minimum of two years run-off cover and ideally six years – to help protect against historical claims following business cessation.

Any ICAEW member with professional indemnity insurance taken out through Marsh Commercial can quickly and easily arrange up to six years run-off cover - please contact your dedicated Bluefin account handler for advice or to secure the appropriate level of cover.

Here to help

If you would like advice on your professional indemnity insurance or if you have any questions or concerns at this difficult time, please don’t hesitate to get in touch with our dedicated ICAEW team and we will do our best to help where possible.

Telephone: 0117 908 4074

Email: PI.enquiries@marsh.commercial.co.uk.