Back to Previous

Professional indemnity insurance: Hope for the best but don’t forget to plan for the worst

Tag
Author
Date published
Price

This blog from Griffiths & Armour briefly details the pitfalls related to professional indemnity (PI) insurance and how they can be resolved.

Perhaps it’s just part of the human condition that we hope for the best but don’t always plan for the worst. On many levels, that optimistic outlook is to be admired but when it comes to the PI insurance market it is often misplaced and potentially dangerous.

Over the past number of years, we’ve looked to explain what’s happening within the PI insurance market through a series of client communications and broader industry engagement. In the past 12 months alone, we’ve delivered:

  • Our detailed Client Information Alert
  • Guidance notes for professional bodies
  • A video summarising how firms should be approaching their renewal
  • A number of industry webinars

These initiatives, together with industry reports, surveys and publications, have helped raise awareness of market conditions. Yet we continue to receive last minute enquiries from firms who are struggling to source renewal terms or facing into severe restrictions in cover; and the message is invariably the same:

“We knew the PI Insurance market was in distress but we didn’t think it would impact on us”

This overly optimistic view, that it must be somebody else’s problem, is often predicated on the firm’s perception of their own risk or the experience they had at their last renewal:

“We are a great risk; we’ve never had a claim”

“Renewal has always been reasonably straightforward, and we’ve been with the same insurer for years”

“Nothing has changed in our business.  We’re still doing what we’ve always done”


What these comments fail to recognise is the fundamental shift that has taken place in the PI insurance market. Firms can find themselves in distress for a whole variety of reasons:

  • There doesn’t need to be a significant claim
  • They don’t need to have exposure in particular sectors
  • They are often firms who have never encountered difficulties before

They are often firms who look just like you.

In a PI insurance market where capacity is severely restricted, you could find yourselves competing to have insurers take on your risk. We all want to be optimistic, we hope to achieve better outcomes. As brokers we have a responsibility to do what we can to achieve that, but we need your help.  

Regardless of who your broker is or how you regard your risk:

  • Start the renewal process early
  • Engage positively
  • Respond to questions fully
  • Make sure insurers understand your business

Over the past two years, we have come to the assistance of many firms but time has been critical in achieving better results - and at times the clock has simply run out. Remaining optimistic is to be admired, it’s an essential trait in the current climate. What we can’t do is let it become a substitute for the affirmative actions that will be required to achieve the outcomes we hope for.

Graeme Tinney
Professional Risks Director
Griffiths & Armour Professional Risks
www.griffithsandarmour.com

Griffiths & Armour are specialist Professional Indemnity Insurance Brokers and risk management advisers. authorised and regulated by the Financial Conduct Authority.  For further advice on your own PI arrangements or to discuss any difficulties you may have encountered, members should contact Graeme Tinney at: [email protected]

 

Related Resources & Events

Course
two people at a desk looking over a contract

Protect your designs – a practical guide to intellectual property

This half-day, online course will equip self-employed engineers with an understanding of the commercial value of their Intellectual Property. The course contains practical advice on how you can protect your design copyright, business name, confidentiality, and inventions.

Date – 17 October 2023
Location – Online
Price – £225 - £355 + VAT
Course
two people shaking hands

Client appointments and terms of engagement: a legal toolkit

This advanced one-day, in-person course enables engineers of middle and senior levels to understand the complex commercial contracts, analyse issues and possible legal implications, and confidently formulate new negotiating strategy.

Date – 6 July 2023
Location – The Institution of Structural Engineers
Price – £305 - £485 + VAT
The Structural Engineer
Woman looking over documents

Professional indemnity insurance: dealing with the 'run-off' risk

In this second ‘back to basics’ article, Graeme Tinney of professional indemnity brokers Griffiths & Armour looks at the implications of the ‘claims made’ nature of PI insurance, the importance of run-off cover and the impact of market conditions.

Date – 14 November 2022
Author – Graeme Tinney
Price – £10
The Structural Engineer
Man signing contract

Professional indemnity insurance: taking care of business

Griffiths & Armour Professional Risks Director, Graeme Tinney, looks at some of the considerations for anyone purchasing professional indemnity insurance and the challenges they are likely to face.

Date – 3 October 2022
Author – Graeme Tinney
Price – £10
Training
Blue abstract blocks

SME business practice conference 2021

Date – 13 April 2022
Author – Various
Price – Free