This time of the year our professional indemnity insurance renewal is most likely on our “to do” list as October approaches. We may have received details of our early renewal offer in the post or by email – basically the tempter from our current insurer to retain our business for a further year. Should we sign off the early renewal offer and think no more about insurance until next year? There could be a bit more work for us to do first.
Should we also take out Crime and Fraud Insurance?
Insurers will be taking note of the huge rise in scamming attempts aimed at law firms, and will look at offering us specialised cyber security insurance products. If you think you don’t need this, consider how many fraudulent/spam emails and even phone calls you may have received over the past year, week even.
If you have never experienced any kind of scam aimed at your business, you are either incredibly fortunate or unaware of exactly what kind of scamming attempts exist and what they look like. They come by email, ransom-ware, phone calls – and increasingly fraudsters are aware that our most valued and important asset is not our bank balance, but our client data.
Insurers are waking up to the legal profession as the ‘soft underbelly’ of cyber security’ following some high profile data security breaches involving client information at law firms. What’s the cost of a cyber attack? Potentially millions or for a smaller law firm – the end of our business.
Are smaller law firms “under the radar” of fraudsters? Definitely not – though this article provides an interesting overview on how the threat to small law firms from fraud may differ from larger law firms.
The key consideration here is to assess the risks, and check if any policy includes corporate identity, telephone fraud and other acts of fraud in addition to cyber security threats.
Could we reduce the cost of our Premium?
The good news is – there are some easy steps we can take that can reduce our premiums.
As recommended by past Law Society President Jonathan Smithers, we should make the most of a competitive market and surplus capacity by shopping around for cover when renewing. I was surprised to read that two thirds of law firms reported staying with the same insurer.
As we know from our own car and household insurance renewal processes, we save huge amounts by changing insurers. In my experience, the same principle applies to the PII renewal process.
In most cases, this doesn’t involve much effort by us. When or before your broker makes contact with details of the early renewal offer, update our proposal form from last year and ask your broker to approach the whole market for a quote. We should then be able to choose from several lower quotes which could shave off thousands, even for a small firm. Your broker may not approach other insurers unless you ask, as he/she may be waiting to see if you accept the early renewal offer.
Do Your Research First
As well as talking directly to your broker about insurance, the Law Society have published a Frequently Asked Questions document about Professional Indemnity Insurance which is well worth a read as is their Practice Note on Professional Indemnity insurance for law firms. There is a large amount of information on professional insurance products online from commercial insurance providers which is also worth reviewing.
Does your Broker search the whole market?
We can check that our brokers are not tied to a limited number of insurers – we can ask them, and verify this ourselves from asking them for a list of insurers they have sent our proposal form to, then checking this against the SRA’s approved list of insurance providers.
Finally, if we are still not achieving a cost saving we can change our broker. Broker recommendations are welcome – please use the comments facility below. Views on any of the issues raised in this article are also welcome.