How shopping around can impact your long-term insurability

The protection offered by professional indemnity insurance (PII) is absolutely essential for any accountancy practice. However, finding the right cover at the right price is becoming increasingly difficult due to the challenging PII market we’re currently experiencing. While it may be tempting to shop around for a better price to use in negotiations with your own broker, be aware of the impact this will have on your future insurability.

Imagine you took out a one-year lease on an Audi. Every year, you approached BMW and Volkswagen for quotations, but you always went back to Audi for another year. Eventually, BMW and Volkswagen will start declining your requests for a quote, deeming it not worth their time as you always end up choosing Audi.

This is how the insurance market can react. If you repeatedly obtain favourable quotes and terms with other brokers for your commercial insurance, yet stay put, the market may assume your broker is matching the quotes or policy terms each year. For your business, this might seem like you’re achieving an optimal outcome year-on-year. As a leading commercial insurance broker and exclusive appointed broker to ICAEW members, we feel it’s important to explain why this might become a problem for you in the long-run.

After a few years, you may see fewer brokers and insurers willing to offer you a quotation at renewal. This not only restricts your ability to change providers, but could impact your ability to seek new terms in the future. Let’s say your business grows, or you start to diversify your business activities which changes your risk – your options may be limited because you have become fully reliant on your current broker obtaining the terms you need.

Ultimately, it’s your broker’s job to ensure you’re getting the best price and policy terms for your specific needs.

We believe that relationships with insurers are important. Approaching alternative insurers too often could subsequently cause insurers to view your business as less attractive, or even decline to provide quotations.

Being part of a scheme offers rewards above and beyond price

Price isn’t everything as policy coverage is key. Not all policies are created equal and if you lack the coverage you need, this could cost you more in the long-run. When comparing policies, consider:

• checking the policy wording thoroughly as each insurer will offer different cover extensions in addition to the basic professional indemnity cover
• whether the policy is compliant for your requirements?
• whether the level of indemnity and excess are suitable for your requirements?

There are a number of ways your broker and insurer can offer value:

Service

The service your broker provides is more important than ever as the market gets more challenging. When given adequate notice, your broker can use their network to obtain the best possible insurance solution to meet your needs. Professional indemnity insurance can be quite complex, so it is best to choose a broker that specialises in this type of insurance. This is because they have the knowledge on how best to present your details to the insurers when negotiating terms as well being able to talk you through the policy coverage.

At Marsh Commercial, our client advisers are here for:

• Client support
• Market engagement
• Risk management
• Policy advice.

Dedicated claims executives are here to:

• Advocate for clients to ensure a favourable outcome
• Challenge insurer reserves and liability decisions
• Improve the claims process for the client
• Provide proactive advice on any current claims market trends that might affect a client.

A scheme

An insurance scheme operates as a separate risk pool, offering members a layer of insulation and stability against rising premiums. ICAEW members in private practice can access ICAEW’s accountants’ PII scheme, developed in partnership with Marsh Commercial.

Price

When you’re part of a scheme, your broker will undertake regular market exercise to ensure pricing and terms remain competitive. This means if you’re part of a scheme like the ICAEW accountants’ scheme, you can rest assured you’re getting a competitive deal. Governance requirements dictate Marsh Commercial reviews the ICAEW scheme every 3 years, which is when we do the shopping around for our clients – letting the collective strength of the scheme obtain competitive prices and terms for members.

There’s no harm in approaching a new broker prior to your renewal if you’re unhappy with your current experience. Our message is that if you’re shopping around, be mindful of the policy coverage and be prepared to change providers if you obtain a better overall policy offering.