Construction and Property PII Renewal 2020 - Presentation is Key
The Professional Indemnity Insurance (PII) market is challenging for all professional services firms, but none more than those working in the construction and property sector.
Many firms have had to deal with furloughing, negotiating pay cuts, reducing working hours, all the while trying to maintain a high standard of service to their clients. Business Continuity Plans have been stretched to their limits and the task of returning to work whilst managing social distancing will present even greater logistical challenges.
PII is another issue, with insurers looking closely at how the current crisis could impact the claims environment for businesses working within the construction and property sector. Rates for PII have been continuing to increase since October 2018 following the Lloyds Decile 10 review and are likely to continue to rise throughout 2020. Whilst this paints a gloomy picture there are things firms can do to help manage their PII costs throughout this challenging period. The way in which a firm is represented in the insurance market and how they present themselves to insurers can sometimes be the difference between success and failure.
It has never been more important to be represented by a broker who not only has a proven track record of working with your profession, but who also has access to, and influence with insurers. Find a broker you can trust to navigate your firm through the process; one that gives you the personal attention you deserve. This is a time for specialist market professionals that have a demonstrable understanding of the inherent risks in the activities you undertake, but importantly, can grasp how your firms manages them.
Do your research. Make sure you select a broker who has experience of the construction and property sector. Your broker will be representing you and your business so it is imperative that you have confidence that they will present you strongly to insurers. A good broker will steer your firm through the current challenges affecting the PII renewal process. But it shouldn’t stop there. They will continue to keep you updated on important factors and regulatory changes affecting the market throughout the year to ensure you are well informed during, after and right on until your next renewal.
Some of the questions you should consider asking a prospective broker are as follows:
- Are you a specialist PII broker?
- What is the extent of your involvement and expertise in our sector?
- What are the main issues concerning insurers, specific to the work we undertake?
- Can you access insurers directly or do you have to use other brokers to access some or all of them?
- What would be your proposed strategy for our renewal?
- Do you have an in-house claims team to provide assistance if a claim is made against us?
- What other support and assistance do you provide during the year?
The proposal form
Firms need to grab insurers’ attention with a strong renewal presentation and whilst proposal forms can provide the fundamentals to a business, it does little to distinguish one firm from another. Insurers are actively seeking to select the best quality firms and each firm should focus on demonstrating the quality of its own risk profile by complementing the proposal form with as much relevant supporting information, as is needed.
Working closely with our clients, Howden has a reputation for presenting excellent renewal submissions to Insurers. We take time to review submissions carefully with our clients before they are submitted to insurers so that we can anticipate any issues or identify areas where more information is required. We are working with our clients to ensure that they are providing the level of information we know insurers will need.
Proposal forms require a great deal of information and take time to complete. Investing time and attention in their completion is important and we highlight the following key points:
- Ensure the form is legible and complete using the electronic format if at all possible.
- Include supporting supplementary information with a clear reference to the numbering of the associated question on the proposal form.
- Ensure that the numbers add up. Insurers don’t mind if you round off your income split between activities to whole numbers or calculate it to three decimal places – just as long as it adds up to 100%.
- Up-to-date claims records from previous insurers should be attached to the form, including those for any prior practices. The number of years you need to go back varies from one insurer to another, although six years is a good starting point.
- If your firm does not record information in a way that corresponds with questions that are asked, then talk with your broker about providing the information that you do record. Provided it addresses the issue that the insurer is interested in, then this should not be a problem.
- Take care with Yes/No questions. The answer the insurer is looking for is usually obvious. If it clearly requires a “yes” answer and you are unable to give that, then it might be that you can give an explanation that will still satisfy the insurer. In that case, you should put a note on the form to refer the insurer to your supplementary pages where the information can be found.
- If your claims record shows significant claim payments or reserves, offer an explanation within your supplementary information. A few lines on the circumstances, your thoughts on liability in respect of open matters and any other points where you feel that the hard facts on the claims print do not truly reflect actuality can help.
- Tell insurers if you have been able to learn from claims, close loopholes, tighten procedures, introduce new systems or in any other way alleviate the chance of recurrence. Insurers will look for this if your claims record is less than stellar.
- Ensure you comply with your duty of fair presentation under the Insurance Act. Double-check your proposal form carefully and ensure that you have disclosed all material information including any claims or circumstances that you have not yet notified.
Some of the above guidance might seem very straightforward, but even small things can make a difference and it is surprising how often some of these issues are missed. Regardless of market conditions, optimising your renewal presentation goes a long way to securing a successful renewal.
At Howden, we have a specialist Professional Indemnity team that is dedicated to the construction and property sector. Howden have been the RICS preferred broker for 10 years and manage insurance on behalf of a broad range of surveying firms as well as architects, engineers and design and construct businesses. We have direct access to insurers and are dedicated to regularly supporting our clients with information, updates, seminars and webinars on issues that impact risk.
Please get in touch to discuss how we might be able to assist with your own PII arrangements.
Greg is an expert in Professional Indemnity for property and construction professionals. He works with clients from across the sector, including engineers, surveyors, and architects. If you have any questions about PI – or any other insurance that affects the property and construction industry – just drop him a line.