An imbalance between supply and demand has led to insurers becoming increasingly selective about the risks that they write.
This means that how a prospective PI purchaser completes their proposal to the insurer has become increasingly significant. As the primary method by which insurers evaluate a business’s risks, it forms the critical juncture for potential clients to explain why their risk should be considered attractive - and often makes the difference between rejection or approval.
We spoke to Stewart Ruffles, Director of Professional Indemnity at the Clear Group, about how PI purchasers can create proposals that help clients to successfully gain cover.
Telling a story
"Tell a story about your business,” says Stewart.
"The primary goal should always be to demonstrate that you have a well run, well rounded business that proactively mitigates risks. And you should tell the story of who your business is and what you do in order to achieve that.”
"Avoid waffle and jargon," he adds. "Say what you do clearly! Insurers deal with a whole raft of different types of businesses, so you need to talk to them in layman’s terms. In particular, if your business is technology based or deals with an emerging way of working, ensure it’s clearly described. If an insurer doesn’t understand the business, he may not want to write it."
Any potential pitfalls? "The proposal forms themselves are often generic, and they usually don’t make clear how much can be added. Buyers should always look to go further than simply answering the questions that have been posed - there’s no need for a data dump, but ensure you’ve given enough detail that the insurer can get the full picture of your business."
You might be wondering if previous claims will affect you negatively - and how to frame them in your proposal.
"If a business hasn’t had a claim, then from an insurer’s perspective they haven’t been put to the test," explains Stewart. "Previous claims can be a positive, provided a business can show they’ve got robust checks in place to help ensure they shouldn’t need to claim for the same reason again."
Turning what might look like a negative into a positive, by showing how the risk has been mitigated going forward, is the key according to Stewart. Bigger firms in particular will almost always have made claims previously, due simply to the quantity of business that they deal with.
With that in mind, the biggest risk? "Multiple claims from the same source can put off insurers," says Stewart.
"If you do have them, as you tell the story of your business, you’ll need to show how you’ve categorically stamped out the issues that led to those claims."
An example of a successful proposal
A proposal Stewart recent successfully led was on behalf of an architect who had had a very large claim previously.
"They couldn’t get insurance - they’d had lots of declines across the market."
"When they came to us, we looked at their risk and immediately we thought of the particular insurers who normally like to deal with this type. But the client had already been declined by them."
The solution? "We spoke to the insurer, and the insurer simply told us to ask the client to write out why they should insure the risk.
The client then wrote out a document, with Clear's help, telling the story of the business - how it was established, and how it has fared since then.
"The end result was that this gave the insurer the reassurance that they needed, and the client was successfully insured with competitive terms," says Stewart.
How Clear help businesses seeking PI insurance
Clear's specialist Professional Indemnity team are specialists at helping clients to create proposals for insurers.
“We’ll ask the questions,” Stewart explains, “But the information must come from the business themselves - they’ll know the details. We’ll then help them to build the story.”
And the secret to Clear's effectiveness for clients? “Every risk has an angle. We’ll help to identify it, and how to communicate that to insurers to show them why they should take an interest in this business, why it’s a good risk for them, and why it’s worth their time to read this story that the client has created to explain their business. Insurers like that!”
To find out more about how Clear's Professional Indemnity team can help your business, click below.