ºÃÉ«ÏÈÉúTV

Professional Indemnity insurance is the third biggest expenditure for some construction firms, so it’s no wonder that the spiralling cost of premiums over the past few years has caused some alarm and contention. In some professions, premiums have risen as much as 500% in three years.

Like property, though, the PI insurance market is cyclical, and the good news is that we are now seeing a softening in it. For professionals such as engineers, architects, and surveyors, premiums will be coming down. In this climate there are good deals to be had while not skimping on the level of service or cover you receive from your broker.

So if you know how to shop around, now is the ideal time to switch to a new broker or negotiate a better deal. But how can you be sure you’re getting the best deal on your PI policy? Have you got the right cover at the right price? And if you want to shop around, where do you start?

When and whether to shop

Before you start to shop around, you should ask yourself the following questions:

• When did you last shop for a quote? There is a limited market of brokers and underwriters and it puts a great deal of pressure on them if policies and prices are scrutinised every year. Perennially subjecting your insurers to competition can affect your reputation in the marketplace. So, as a rule of thumb, you should only consider shopping around every three years.
• Do you pursuing a large number of claims?

If your firm is, or you have a claim with the potential for a large settlement figure, insurers are more likely to take a negative view of you if you place them in competition with other insurers. Also, it is worth remembering that if you switch, claims stay with the previous insurer and your perceived lack of loyalty will not encourage them to fight your corner, so you could jeopardise your position and your future risk profile.

• When is your renewal date? Start looking at least six to eight weeks before your renewal date, particularly if your risk profile is complex. Arranging suitable PI takes time and you must allow you and your broker enough time to ensure that you get the best cover at the best price. This also prevents the creation of a gap between your policies, which should be avoided at all costs.

Which broker?

If the time is right, the next step is to find the right broker. Don’t assume that all of them will approach the best insurers, or that all insurers will offer the same cover. With this in mind, assess brokers on the following criteria.

• Does your broker deal with the insurers directly? If your broker has direct relationships with insurers they will be able to negotiate more effectively.
• Does your broker specialise in construction? A broker with expertise in your industry will have a better understanding of your requirements and risks and will be more likely to provide you with a more focused and relevant policy.
• Does your broker offer additional risk management services? A good broker will offer such additional services to support best practice health and safety procedures, thereby reducing risks and leading to lower premiums.

Using these criteria, shortlist two or three brokers. Assess policies based on:

• Price.
• The security of the insurer – independent providers of credit ratings such as Standard & Poor or AM Best provide security ratings, and you shouldn’t settle for less than an A-rated insurer.
• Hidden charges – clarify any hidden extras early on, such as insurance premium tax, to prevent any later surprises.

Approaching the insurance market for alternative quotations does not have to be a complicated process, and following the above steps should make it less daunting. After all, insurance is there to protect you and your business – and as it is one of your firm’s biggest expenditures, it is worth investing some time and energy to shop around and ensure that you get the best possible deal.