Changes in the PII market plus advice on the impact of COVID-19

ICAEW’s PII Committee wish to highlight that there has been a hardening of the professional indemnity insurance market over the last 18 months. This means firms may find it more challenging (and/or time-consuming) to renew cover than previously. It could also mean that firms find their premiums increase significantly. Additionally COVID-19 may be affecting response times from brokers and insurers, as well as firms’ ability to meet the costs of increased premiums.

The ICAEW PII Committee recommends that firms:

  • Prepare early for your renewal.
  • Provide complete and accurate information to insurers at the outset to ensure a smooth renewal or transfer of cover to another insurer.
  • Note that if you are unable to obtain a new policy before your current one expires, your last insurer is required (under the minimum approved wording) to extend cover for an additional 30 days (see clause D3).
  • Speak to your broker/insurer about whether alternative payment terms may be available if you are struggling to meet increased premiums.
  • Note that a policy may not be cancelled unless both the insurer and the insured agree mutually in writing to cancel the policy (see minimum approved wording clause C11).
  • Ensure you are open and transparent with your insurer/prospective insurer when you take out/renew cover to safeguard the indemnity available for a claim. Firms have a legal obligation to make a fair presentation of the risk on taking out or renewing cover.
  • Ensure you read and completely understand the terms of your firm’s PII policy. If any points are unclear, clarify these points with your firm’s broker. (Disruption to business and the economy caused by COVID-19 is likely to result in an increased number of PII claims against accountants and other professionals.)

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