Insurance Claims in respect to Professional Indemnity

There has been a recent increase of claims in respect to professional indemnity insurance for various professions particularly solicitors PI and independent financial advisors. In addition the banks who have miss sold an awful lot of policies via their insurance services sections where they have been suggesting compliance and offering them a personal injury and redundancy plans etc which were completely wrong for many of those clients.

It probably hasn't gone past anybody's notice of recent weeks where massive amounts of both television and radio advertising is encouraging people to make claims if they have taken out one of these plans. This will only cumulate into claims being made against professional indemnity insurance policies.

The fact remains that these insurance plans should never have been sold in the way that they were and that both banks and some (but very few) brokers targeted people and coerced them into purchasing policies that either didn't fit the circumstance or were in fact totally wrong. When it comes to treating customers fairly this has not been adhered to in the promotion of these plans.

It is therefore reasonable to assume that insurers who have covered various businesses that sold these plans with professional indemnity, can expect some big claims to be made.

There is also a consideration here that many of the brokers or organizations that sold these plans and had PI insurance in place, may very well have excesses to pay themselves.

The moral of the story here is that anyone selling insurance services, should not necessarily be put under pressure to sell a particular product and clear definitions and explanations should always be given to a client before they purchase such a policy.

How does treating customers fairly impact on Professional Indemnity (PII) TCF

There has been a great deal of talk about treating customers fairly over the years, with the FSA heading up an aggressive campaign to insure that its rules were meet in this arena.

We all of course need to have definitions and explained criteria for TCF which were not always clear and maybe just a little over the top when it came to 'smaller brokers'.

So some years on has TCF helped the clients we deal with? Has it made an impact? It would be fair to say that TCF has helped both clients and brokers alike, setting a standard for us to offer as an industry, however many of the set out rules were totally unnecessary and over the top. Simple rules to abide and police would have been the answer.

With regards to Professional Indemnity insurance claims over this period directly related to TCF have not been a problem for brokers and the cost for Professional Indemnity insurance has not increased in the broker sectors, although it would be fair to say that perhaps in other areas such as banking and the motor industry where insured products have been sold, Professional Indemnity insurance claims have increased and rightly so.

Professional Indemnity rates still low 2011

Apart from the obvious high rated professions such as solicitors, independent financial advisers and survey valuation companies, the general rates for Professional Indemnity insurance have remained very low or static even for professions such as accountants and architects. The most competitive prices and costs with good policy definitions and clear explained (PII) wordings are miscellaneous professions such as IT consultants, business consultants and management consultants, the wordings for these classes have also been improved by some Insurers and provides Professional Indemnity insurance covers with any one claim and low excesses. PII brokers are also able to obtain worldwide cover including USA & Canada with low policy excesses.

Director of Professional Insurance Agents ltd, Graham Hearsey states that even though cheap and low prices are readily available for many classes on Professional Indemnity, that this would be a real danger to insurers and underwriters and that prices should clearly harden to meet possible claims

The War in Libya & Liberation of Tripoli/Insurance Claims

It is of course fantastic news that the people of Libya & Tripoli have managed to almost gain their freedom to rule the country in a democratic way, and we wish them the very best for the future with hopefully no more bloodshed or in fighting.

There has of course been a terrible human loss and massive property damage in Libya but of course if a Libyan had taken out a standard worded insurance policy either for life or property they may well find that the insurance policy would not be able to respond to any claims based on a terries & war exclusion that the insurance policy may have had.

Naturally it will be very difficult to obtain a policy wording placed in the London market where brokers would be able to now offer without large exclusions for those Libyan companies or people who want to obtain insurance or anywhere in the Middle East at present.

Brokers would also find  that if they were able to get a policy, the cost would be very high and certainly not cheap.

Going forward brokers should always now be careful as to how their clients are presented with the policy covers and exclusions or they could easily find themselves with a Professional Indemnity Insurance claim, from a client who has not been given correct definitions or explained in detail the problems that having a war and terrorist exclusions brings with it.

Half of SMEs fail after insurable loss

Insurance experts said that Nearly 85% of SMEs think  They are fully insured but around half fail after an insurable loss to their business.

Suncorp chief of commercial insurance Anthony Day said while large corporations are generally covered for business interruption and major perils, small firms are less proactive.

“The lower take-up rate among small businesses is an issue. Around 60% of SMEs aren’t covered for business interruption to protect profits if they suffered a major loss,” Day said.

Daniel Fogarty of insurance firm Zurich said “Zurich is focused on SMEs and the brokers who serve them… Our Queensland sales are doing very well and SMEs are definitely interested in flood cover,”

 Fogarty stressed that the importance of getting the right advice for coverage, particularly in relation to flood cover because of the lack of data needed to price flood risk.

“If you’re starting out, working out what to insure against before you’ve even made a profit is hard,” a spokesperson says.

Small Business Victoria said an insurance broker is a professional insurance expert who will represent your interests, so this contrasts with an insurance company or insurance agent who may act in their own interests or those of the insurance company.

 “Choose a broker who understands the day-to-day risks of your business. If you do, you’ll get a policy that covers the risks particular to your business.”

Small Business Victoria outlines some key insurance policies for small businesses:

• Professional indemnity. If you supply advice, you can be sued for financial loss due to errors or emissions. Examples of professionals who require this cover include architects, designers, education workers, real estate agents and consultants.
• Personal accident, illness or disability. This refers to your inability to work and loss of income, and is particularly relevant to sole traders.
• Insurance over premises. If you own or lease a building for your business, this insurance will help you rebuild or replace contents in the event of a disaster such as theft, fire or storm damage.
• Workman’s compensation/employment insurance. If you plan to have employees working at your business, you are legally required to have this insurance. It protects employees and/or contractors from injury.
• Public liability insurance. This insurance protects your business if a customer is harmed by using your product or is injured on your premises.
• Business interruption. This provides cashflow based on expenses and expected net profit if business is interrupted by property damage or other uninsured perils.
• Electronic equipment or breakdown. Covers the cost of replacing computers and data re-entry after an insured event.