I've found a cheaper quote

Published: Tuesday, 16 May 2023

Currently everyone has an eye on the bottom line and any cost saving opportunity will be considered. There will almost certainly be insurers willing to give cheaper quotes.

What should you consider if price is key for your firm at the moment?

Why do premiums increase?

• Your turnover has grown
• You are carrying out more ‘high-risk’ business i.e. those that have historically produced more claims
• There have been large claims in your industry that concern insurers. Insurers may withdraw from your industry, leaving a smaller pool, who may charge more to cover the perceived risk.

Changing insurer

If you have any claims or circumstances, it may be wise to stay where you are until these are resolved. It can really complicate communication between parties. In addition, many insurers won’t quote for a new company that has a significant claim ongoing.

Certain insurers provide wide ranging cover and they charge accordingly. Other insurers may give ‘bare bones’ protection which may not be sufficient to save your business if a major problem occurs. Most insurers will be somewhere in between.

Have you compared the proposed policy and your existing cover? Your broker should have pointed out the main differences in writing, but you should also read the policy in depth to check the fine print. No one knows your business as well as you! Is there anything in the small print that has been excluded that you may need or onerous conditions to be complied with?

Areas to look at include:

• Excess -payable by your firm if there’s a claim
• Indemnity period – the length of time you’re covered for after an event e.g. a fire. How long, realistically, would it take you to re-establish operations?
• Indemnity limit – is it sufficient for your needs?
• Wording – are the claim reporting requirements fair?
• Exclusions – things that are not covered by the policy. Typical exclusions often seen in PI policies are e.g. cyber, internal fraud
• Onerous conditions – e.g. reporting claims within a short time period. If you are in a line of work where claims appear several years later, this could be unhelpful.
• Aggregation of claims – if you have more than one claim of the same type, will the insurer cap their total liability claims, treating them with a single aggregate policy limit?
• Your regulatory requirements – ACCA accountants are required to have fidelity cover, not all insurers include this

Insurer service and claims management

Some insurers, when very new to the market, and without an established reputation can get their pricing wrong and this may need serious correction in future years making their premiums unpredictable.

In the past, insurers entering volatile parts of the insurance market without sufficient levels of capital have failed. This is one of the worst things that can happen to a policyholder. If your insurer fails within your policy year, and you are in a regulated profession, you may need to purchase another insurance policy. If the Insurer is no longer trading when you make a claim, this can create uncertainty of claim payments. (Professional Indemnity claims are dealt with by your insurer at the time of the alleged incident, not by your current insurer.)

Established insurers with good credit ratings are typically tried and tested. They have built up their reputations and are known for their fair and supportive claims treatment.

Changing broker

If you are considering moving broker to access a better price, you should establish which services will be provided and whether there are any other charges for additional services. It is also worth checking what percentage of your premium your broker will retain for their services, we know of some whose charges can be 50% or more. The average is around 25-30%, depending on the type of work. If you are a large business, or complex to insure, you may be able to negotiate a fee for the services.

Does the new broker have experienced in house claims support, to work with you if you have a claim? This can save a lot of time, stress and misunderstanding.

In conclusion, there are a number of factors to weigh up before choosing a lower premium. Do discuss it with us if you are unsure. We will always tell you whether it’s a good deal or whether there may be downsides for you to consider.

Isobel Horswell
Marketing & Compliance Executive, Ntegrity

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