“Risk is very much part and parcel of everyday life and comes with running a business. The ability to understand, manage, and mitigate risk is crucial to long-term success." Alistair Fraser, CEO, Commercial & Corporate, Marsh UK.
We’re here to help you better understand the risks you face as a chartered accountant, whether you operate as a small practice or you’re working as a sole practitioner – and what you can do to mitigate risk.
Whether your accountancy firm is relatively new or well-established, managing risk and preparing for challenging situations is the key to avoiding potential claims and being able to respond if the unexpected happens.
Using a broker to arrange your business insurance is essential, as not all professional indemnity insurance is the same. A specialist PI insurance broker knows how to get you the best terms for your commercial insurance, based on your individual needs.
Commercial insurance such as professional indemnity (PI) insurance plays an important part in protecting you from the everyday risks you face.
As a chartered accountant, you strive to deliver a professional service for your clients without any mistakes. Unfortunately, this isn’t always the case, and you may need to defend yourself if a client alleges you are responsible for causing them financial loss due to:
The ICAEW requires that members hold PI insurance, however not all PI insurance is the same. It’s important to arrange a policy that provides the right protection for your specific business activities.
Did you know there’s a PI insurance scheme designed especially for ICAEW members? As well as meeting the minimum requirements set out by the ICAEW, the scheme also provides enhanced benefits.
Get a quote online, and arrange your professional indemnity insurance at a time that suits you. You can also contact our dedicated team of PI insurance experts who currently manage more than 4,300 PI policies on behalf of members. Find out more about the ICAEW PI scheme here.
Your reliance on technology will have undoubtedly grown in recent years: from the increased use of mobiles and the web to collecting and storing client data. However, with this increased use of technology, your business faces a higher risk of cyber-threats. It's essential to stay vigilant and have the right cyber liability insurance in place that offers the necessary protection.
Managing risk effectively in your small accountancy business could include:
As your business grows, recruitment, acquisition, and employee challenges also increase. It's essential to be prepared and be able to respond to them.
If you have plans to grow or diversify your business activities, ask your broker to help you manage risk and ensure you remain protected.
If you're planning to expand into new areas, you might find your clients require a wider range of services over time. There are a few things to consider:
To maintain protection for your business when you or your employees stop trading, you’ll need to have a professional indemnity (PI) run-off insurance policy in place. Without run-off insurance, any claims brought against you for work carried out in the past will not be insured.
Run-off insurance provides the cover of a PI insurance policy. This covers legal costs and expenses involved in defending a claim, as well as compensation payable if you’re found to be responsible for causing financial loss to your client because of negligent advice, errors or omissions in your service.
The key difference with a run-off policy is the endorsement that is added by your insurer stating that cover will not be provided for any service or work provided after the date you cease trading. Typically, run-off policies are maintained annually for up to six years. The ICAEW recommends that members hold run-off insurance for six years, but requires a minimum of just two years.
Retirement is a typical reason accountants might purchase run-off insurance. This is particularly popular with smaller firms or sole practitioners. Occasionally, larger accountancy firms may be sold or taken on by another firm or individual who maintains the PI cover, but this is not always the case. For example, the new owner may not wish to be responsible for the legacy liabilities. Conversely, the departing owner may not want to be responsible for their liabilities being trusted to someone else.
In both scenarios, it's necessary to keep a run-off policy in force after retirement to cover any claims that may arise in the future.
If you’re a member of the ICAEW, you can get a quick quote for PI insurance online. Alternatively, read more about the ICAEW members’ PI scheme. If you would like to discuss professional indemnity insurance with an expert in PI for accountants, contact Marsh Commercial by email or call us on 0330 1623 862.
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Helping members to be Aware, Identify and Manage some of their key business risks
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