The risks of shopping around for PI insurance

Professional indemnity (PI) insurance is essential to protect your accountancy business. But do you know there's a potential risk to shopping around to find the best deal?

Finding the right cover at the right price can be challenging, particularly in the current financial climate. It might be tempting to search the market to find a better price to use in negotiations with your broker, but this may negatively impact the future insurability of your business.  

Why comparing quotes can be an issue

Let's look at an example. You take out a one-year lease on an Audi, then approach BMW and Volkswagen each year for quotations, but always revert to Audi. Eventually, BMW and Volkswagen will start declining your quote requests; it's not worth their time as you always choose Audi.

Using this example in the context of insurance. Suppose you repeatedly obtain favourable quotes and terms for your commercial insurance with other brokers but remain with your current provider. In that case, 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. 

Don't limit your future options

Over time, fewer brokers and insurers may be willing to offer you a quotation when your policy is up for renewal. Not only will this restrict your options to change providers, but it will also impact your ability to explore new terms. Let's say your business expands or diversifies into new areas that affect the risks your business is exposed to. Your choices may be limited because you rely entirely on your current broker to obtain the terms you need.

Trust your broker to search for the best price and terms

Price isn't everything. The coverage and protection your policy provides are critical. Not all policies are the same; if you lack the coverage you need, this could cost you more in the long run. Ultimately, your broker's job is to ensure you get the best price and policy terms for your specific needs. When comparing policies, consider checking the following:

• policy wording – each insurer will offer different cover extensions in addition to the basic professional indemnity cover
• coverage – make sure it's suitable for your business requirements
• level of indemnity and excess – does it fit your needs?

Support from your broker is more important than ever as the challenging market continues. PI can be pretty complex, so it is best to choose a broker specialising in this type of insurance. They know how best to present your details to the insurers when negotiating terms and talk you through the policy coverage.

Protection against rising premiums

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 PI scheme, developed with Marsh Commercial.

When part of a scheme, your broker will undertake regular market reviews on your behalf to ensure pricing and terms remain competitive. Marsh Commercial is required to review the ICAEW scheme regularly, we do the shopping around for our clients. The collective strength of the scheme secures competitive prices and terms for members, and a degree of protection against market volatility.

At Marsh Commercial, our client advisers are here for you

Being part of a scheme offers rewards above and beyond price. As the exclusive appointed insurance broker for ICAEW members, we believe that relationships with insurers are essential. Our dedicated claims executives are here to:

• advocate for you 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.

We also offer ICAEW members:

• client support
• market engagement
• risk management
• policy advice.

We're the trusted PI insurance partner of the ICAEW because of our:

• depth and breadth of knowledge of the accountancy sector and PI insurance
• exclusive accountancy PI scheme developed especially to meet the needs of ICAEW members
• access to the UK's leading and specialist insurer markets
• strategic relationships with reputable A-rated insurers
• excellent service and professionalism
• in-house claims service.

If you decide to search the market…

Approaching a new broker before your renewal date is acceptable if you're unhappy with your current experience. However, if you shop around, read the small print, be mindful of the policy coverage and be prepared to change providers if you acquire a more favourable overall policy quotation.