How insurance schemes can provide protection against premium increases

Over recent years, the insurance market has been hardening: a rise in claims has resulted in fewer insurers prepared to offer PI cover, which means reduced capacity, limited policy coverage, and those insurers still operating in the market are selective about who and what they choose to insure.

These difficult market conditions have impacted accountants buying PI on the open market. Many face significant premium increases when the time comes to renew cover – particularly those renewing with recent claims. While there is light at the end of the tunnel, we’re likely to see hardening market conditions persist into 2022.

However, there is positive news for ICAEW private practice members looking to arrange PI cover through Marsh Commercial.

Our accountants' professional indemnity scheme operates as a separate ‘risk pool. ICAEW members benefit from protection against rising premiums currently affecting the wider market, one of the significant benefits of participating in a scheme rather than searching the open market. Let's explore why:

Understanding risks

Firstly, our insurer, QBE, works with us to understand the overall risk profile of the ICAEW members’ scheme. This due diligence gives QBE more confidence in taking on more complex or higher risk clients, knowing lower-risk clients will balance them out.

Safety in numbers

Here at Marsh Commercial, we look after more than 4,300 policies for ICAEW members. This strength in numbers enables us to negotiate improved terms with insurers. We can offer level terms for the majority of members and protection against the fluctuations of the external insurance market. Members are less likely to experience the kind of premium rises that are now commonplace in wider PI markets.

Benefits for ICAEW members

Of course, relying on stable premiums is not the only benefit of being a member of the ICAEW scheme. Additional benefits and enhanced terms include:

• A six-year run-off facility for members who cease trading or are looking to retire. No need to worry about annual renewals.
• The cost of court attendance compensation limit is increased for the principal partner, member or director
• Cover for replacing, restoring or reconstituting physical documents
• Circumstances known prior to the inception of the policy period that have not previously reported, are not automatically excluded
• Cover for appointments as a director of a third party company – cover provided is only in relation to services defined by the insurer
• Insurer security termination clause, allowing you to terminate the cover if the insurer’s security rating is reduced
• Joint ventures – limited to acts of the insured only and excludes claims for work carried out by other parties/employees of the joint venture.

Members also benefit from packaged cover that includes PI, office, and cyber insurance, helping to eliminate gaps and overlaps in cover.

Our team here at Marsh Commercial is dedicated to supporting ICAEW members. We're ready to support you with everything from risk advice and renewals. Our specialist claims handlers are experienced in dealing with accountancy claims and guide you through the process step-by step.

Will the pandemic impact the PI markets

It’s still difficult to determine how the coronavirus pandemic might affect your PI cover. While some insurers have highlighted exclusions of cover for COVID-19, this has mainly related to business interruption insurance – and no such clarity is yet available when it comes to PI.

An influx in claims may be seen as a result of activities undertaken during the pandemic, driven from new working practices and a potential reduction in controls, but again it is still quite early to go into any further detail on this topic.Rest assured, we are working with insurers behind the scenes on your behalf to identify, mitigate and clarify any changes to PI cover as a result of COVID-19. Our advice is to stay in regular contact with your account handler.

If you'd like to learn more about the ICAEW PI scheme, receive advice on your current PI policy, or ask a question about cyber protection, please contact our ICAEW team on 0345 894 4684 or email ICAEWenquiries@marshcommercial.co.uk.