The Professional Indemnity insurance market is going through a sea change. I realise that you may think it is an expensive class of insurance to buy in comparison to the cover provided but the last decade has seen rates at unsustainably low level, historically, due to the level of capital and competition between insurers and investors. However, that has all changed as the claims come flooding in in all services and industries as people try to recoup the financial losses they have suffered at the hands of service and product providers, perceived or otherwise. Lloyds alone announced £1bn losses for their most recent reporting year. 

Buyers now need to be aware that underwriters are going to be asking many more searching questions about the services you provide and how. Now is the time to take a step back and drill down into your management systems, tender processes, review programmes. What are you looking to provide your clients and how? If you think you have agreed everything run through it one more time either with internal or external peers. One last meeting with the client to check you both understand the terms of the contract and what is deliverable won’t hurt. Don’t stop there. Periodically check how the contract is running. Get your clients’ thoughts. Amendments? Get them in writing and agreed with the same due diligence that you would have applied were it a whole new contract. How do you know the materials supplied are the right ones? Whose word/reports/test results are you relying on? Finally, document your procedures – the peer review system, contract checks, training/CPD. Capacity in the PI market has been severely reduced along with the number of underwriters.

For the foreseeable future only those who can demonstrate the Gold Standard systems above will even get to be considered for insurance let alone quoted on.