Steps to avoid derailing an insurance renewal

Miller Insurance Services discusses how presumptions about the soft market can threaten a professional indemnity insurance renewal, along with a helpful guide to protection success

The messages regarding a soft market for professional indemnity insurance (PII) doesn’t mean that law firms can take their eyes off the ball and assume that their PII renewal will be plain sailing. We have been approached by a number of firms, very close to their renewal deadline, panicking about an unexpected insurance decline and apparent inability to get alternative terms.

Our experience suggests that many firms with potentially complex or difficult renewal cases are not receiving the advice they require up-front, risking declines from multiple insurers and putting the future of their business at risk.

The problem

A firm approached us with three weeks to go before their renewal date. It had been with the same insurer for more than four years and had renewed their policy straightforwardly to date. The firm had submitted their renewal paperwork to their broker a few weeks previously and, given the messaging about a soft market, assumed that they were in for an easy and cost-effective renewal. Imagine their shock, three weeks prior to renewal to be informed that not only had their incumbent insurer refused to offer terms, but also that there were no alternatives on the table.

A quick review of their proposal form revealed a number of issues:

• Inconsistent responses to questions, including work-splits, fees and answers to work-type specific questions.

• Non-responses to some important questions.

• A number of potential ‘red flag’ issues regarding types of work undertaken, claims patterns and regulatory issues.

It is important to be aware that the risk profile of particular work types has changed recently. Equally, insurers’ risk appetites can change. Over the last 18 months, a number of underwriters have moved to different insurers, this has been a contributing factor to changes in insurers’ risk appetite. Changes in the insurance capacity behind certain managing general agents (MGA) — intermediaries that have underwriting authority delegated to them by an insurer — have also led to changes in underwriting appetite.

It was precisely this sort of change that had created a problem for our potential client. It’s much more difficult to undo bad first impressions, and the fact that several alternative markets had been shown this firm’s initial submission, made our broking job a good deal more difficult.

The solution

Considering the problems with the firm’s existing submission, we arranged an urgent meeting with the firm to pick up on all the errors and inconsistencies in their initial presentation. Given some complex claims issues, we also arranged a deep-dive claims review, utilising our claims and risk management teams.

We took the time to truly understand the firm, the way it worked, and assess its risk profile — helping them articulate past issues and the steps taken to address them, alongside a series of prioritised ongoing risk-improvement actions. Importantly, we were able to establish that the areas of work that had caused the most significant claims (and that had triggered their insurer’s decision not to renew) were historic. Additionally, that similar matters had been audited since then, providing reassurance that the risk of further similar claims arising was low.

Understanding both their business, and current insurer appetite, helped Miller to re-broke this firm to both their incumbent insurer and a range of alternative markets better suited to their profile. Our ongoing risk engagement formed a key part of the renewal offering – providing insurers with confidence that the firm would be implementing an agreed series of risk improvements over the course of the next year, with Miller’s support.

We were able to secure two quotations for the firm by their renewal date, despite the very tight timeframe — and have already worked closely with the firm to help them deliver on their risk management priorities, in preparation for their next renewal.

Essential considerations for successful renewal

Here are five key renewal takeaways:

1. Take your renewal process seriously. Ensure that you can answer all question on the proposal form meaningfully and check your responses for accuracy and consistency. Your insurance broker should be able to explain the relevance of particular questions, and the information that an insurer expects to see in response.

2. Submit your renewal form promptly. This allows your broker to review your submission carefully and come back to you for further information where required. It also allows time to market your firm properly to insurers.

3. Ask your broker about any changes to insurers’ risk appetite. Miller regularly shares market insights with clients. Do not assume that a soft market means an easy renewal for your firm, regardless of its risk profile.

4. Understand your risk profile from an insurer’s perspective, while ensuring that you proactively address any potential concerns head on.  If they emerge later down the line, from insurer’s questions, you will always be on the back foot.

5. Work with a specialist broker that you trust to advise you honestly and represent your best interests. Not all brokers are the same.

Firms must remember that their PII renewal is never a ‘tick-box’ exercise. Ensuring that proposal forms, and any additional information provided, is consistent and presents the firm in the best possible light is crucial to a successful renewal.

Complete and accurate information provided at the outset helps avoid unnecessary delays and issues down the line. The right preparation, advice and broker partnership are essential, regardless of market conditions.

Miller is a market leading broker with over 30 dedicated specialists in the solicitors PII market, including dedicated claims and risk management teams. We offer an elevated level of expertise to service your professional indemnity and broader insurance needs and are confident that we can not only meet but exceed your expectations.

For more information on how Miller can help you with you PI renewal, get in touch with Calum MacLean or Sam Pye.