Is an important premium factor given it shows the amount services you provide to your clients. Typically, your most recently reported turnover. Obviously, the more work you undertake the increased risk exposure to errors, omissions, and subsequent claims for damages. Additionally, insurers will typically want to understand the nature and size of your contracts - which provides an indication to risk of future claims, with larger scale projects typically carrying increased professional indemnity premiums.
What service you provide to you clients is a key rating factor because different services will have higher or lower professional liability risk of future claims. Some industries such as financial services are more prone to litigation and will carry significantly higher premium costs. It is important to note that your Policy Schedule correctly reflects your business activities because if you provide services that are not associated then you could find yourself without cover.
In addition to qualifications will acts as an indicator of your ability to: 1) provide accurate advice or services; 2) match advice and services to the client's needs; 3) manage client expectations; 4) recognise and mitigate client dissatisfaction. The number of years you have successfully traded without claims will mean a discount to your insurance premium. An extended period of successful trading without any circumstances means you are likely to obtain a further discount.
Contractual conditions provide the first line of defence against professional indemnity claims. Therefore, insurers may require you maintain certain contractual conditions. Your professional indemnity cost and availability of cover can be impacted if your contracts do not maintain: (1) a description of services; (2) limitations of liability; and (3) a consequential loss exclusion. Lack of standard contracts that mitigate your risk and legal vetting can indicate a reduced level of risk management and appreciation for the liabilities being accepted.
Most insurers will not provide cover to claims for compensation against you under USA law and jurisdiction unless you specifically negotiate the coverage extension. If you contract with US clients, it is recommended you do so under UK law to keep your professional indemnity insurance costs lower. If disputes under contract are agreed to be held in a US court this will need to be declared to your insurer and will have a significant impact on the premium, due to its litigious nature and expensive awards.
The number of years you have successfully traded without claims will mean a discount to your insurance premium. An extended period of successful trading without any circumstances means you will obtain favourable terms. Whereas, high claims severity or frequency, with a lack of remedial action can indicate a lack of quality risk management and systemic issues. It is recommended that any claims are described in detail - which means identifying whether the claim is still open, how much as been paid to date, and what is the current reserve.
It is recommended when you apply for professional indemnity insurance you should breakdown your business activities and turnover with as much detail as possible. If your turnover is made of professional fees and other income, such as products sold, it is important to clearly separate because insurers should only take into consideration your professional fees when calculating your professional indemnity insurance cost.
By offering complete answers in your business insurance application, insurers will have greater capacity to offer competitively priced premiums. Information that identifies how your business represents a better risk than your industry peers can increase the availability of cover and reduce your professional indemnity cost. Insurers will consider professional indemnity discounts where evidence of compliance procedures, risks assessments and/or complaints register demonstrate your risk adverse nature and high level of due diligence.
It’s important to understand that each insurer will make their own determination over your risk exposure. If they choose to provide you with a quotation, they will undertake a professional indemnity premium calculation to accept your risk and pay future claims under the policy. Each insurer will weight different key factors to determine a price that they deem acceptable. If they price your insurance premium to high, they will not win the business. If they price the portfolio of risks too low, they will make an underwriting loss after paying the claims. That's why it's important to work with a professional insurance broker to ensure you obtain the best terms available from the market.