The previous post described the background to the current PI issues in the market and the challenges facing advisers. From our experience, here are some key tips that will help you with your PI applications:
One of the most significant contributing factors for firms receiving onerous terms is when their proposal form is submitted just a week or two before the renewal date. This can typically cause last-minute issues if the insurer requests further information, or offers any unsatisfactory terms, as it may not leave enough time for further discussion, or time to seek alternatives. Find out, well in advance of your renewal, if there have been any developments with your insurer and let your broker know if there have been any updates in your firm that may impact your forthcoming renewal.
We see many firms that have been presented incorrectly to insurers by an inexperienced broker. The correct presentation to insurers first time is key. There are extensive benefits in having a specialist IFA broker, who fully understands your business, motivating the IFA PI market to work with you, not against you. There are very few specialist brokers with direct access to the IFA PII market and this is especially relevant in a hard market. A simple conversation over the phone or meeting should reassure you as to their understanding of the market.
In this current market, there are rather a lot more brokers than insurers. Sending your submission to too many brokers, potentially, means the same insurer is being approached multiple times with varying standards of presentation, which could negatively affect your renewal process. Your broker should guide you as to the insurers they will approach and the potential outcomes. It is also important to establish whether your broker has direct access to insurers or whether they are going through another broker. It is rare that the extra links in the chain enhance communication and understanding.
A rushed, untidy proposal form with poor responses or ignored questions, is likely to impact the way your firm is perceived. Ensure that your submission is clearly completed, percentages totalled and any supplementary information is clearly labelled. It is also vital to accurately answer questions. This has disclosure implications, as anything which is omitted may not be covered down the line. If you have had any noticeable change from last year (e.g. spike or drop in income, claims, new activity etc.) provide additional information to the insurer. Ensure that additional information provided is clear and concise. Avoid “data dumping” huge amounts of documents.
Once you commence your renewal process ensure that you remain in regular communication with your broker and receive terms well in advance of your renewal date. This will prevent any last-minute surprises and ensure that you can fine tune and discuss any alterations to your cover.
Continuity can be important for maintaining coverage but this is not always possible due to changing underwriter appetite or withdrawals from the market. If you are changing your insurer, then make sure that you are fully aware of any changes in coverage and implications of any increased excesses or terms.
Once you have gone through the renewal process, assess what you can do during the year to keep insurance underwriters reassured for your next renewal. Has anything flagged up during renewals that you can limit or review during the year? Engage more with your external compliance provider and see what services they can offer to limit the exposure on your firm. This shows that you are proactive and aware of the concerns that underwriters have. It would be good to enquire as to whether there is any opportunity to meet or arrange a call with your underwriter in the run-up to your renewal.
With regards to DBs, we have provided some focused tips as to what you should provide to support your application;
Hopefully, this will help you as an IFA plan and prepare for your PII renewal. There are no two ways about it, the market is currently difficult and less straightforward than it has been for a number of years, but by being proactive and concentrating on your renewal, you should effectively minimise any negative outcomes and we can all hope that the market gets easier in the years to come.