If you’re finding it hard to get PI insurance, don’t panic! We helped a law firm find cover when the odds seemed stacked against it.
A general high street solicitors’ practice was told by its insurer that its cover would not be renewed just a week before its policy was due to expire. Its broker, which it had used for the several years, told the firm that it would not be able to help it find alternative cover – the law firm wasn’t aware that the broker worked exclusively for the insurer that had just turned it down.
So with just days left before its existing cover ended, the law firm had to find a new broker and a new insurer. It had got a string of refusals and faced the prospect of having to close down. That was when it was referred to us.
What happened next?
The law firm had struggled to find insurance because it had been the victim of a number of frauds, which had resulted in large claims. Insurers were nervous of it, but having looked into what had happened, we realised the law firm was a much better risk than underwriters had given it credit for.
The claims it had suffered were the result of failures in its internal processes, which it had already taken steps to address. But the law firm hadn’t explained this to insurers – it had failed to get the message across that it was doing everything it could to prevent similar claims from happening again.
Part of the problem was that it didn’t know how to market itself effectively to insurers, because it hadn’t looked for cover on the open market for some time. In recent years, it had simply accepted its previous insurer’s early invitations to renew its cover, so lacked the presentation skills and understanding of today’s insurance market that it so badly needed, especially now that it was viewed as being a problem risk.
Also, none of the other brokers it had contacted before us had taken the time to understand the law firm’s needs or to explain its realistic options. The parting advice of its previous broker – to ’cast a wide net’ in its increasingly desperate search for a new insurer – might have sounded like commonsense, but the law firm actually needed to take the opposite approach. It needed to work alongside its broker to persuade a selected handful of open-minded insurers that, contrary to what its recent claims history might suggest, it was a good risk.
Although we knew we were up against the odds, we were confident we could convince insurers to offer the law firm cover and so enable it to stay in business.
What did we do?
Our first piece of advice to the firm’s partners was that we should use the 30 days stay of execution offered by the extended indemnity period rather than rush to find a new insurer before their existing policy expiry date. That sounded like a high-risk strategy, but we knew we had to take time to develop a strong approach if we were to succeed in finding it a new insurer.
Next, we told them we needed to narrow the search, rather than continue with their previous scattergun approach. We explained how although this might sound counterintuitive, only a few insurers in the market would realistically be interested in insuring them, based on their size and their track record, and we identified the handful we thought would be the right ones for us to target.
After that, we worked hard with the law firm to produce a really strong proposal that would persuade those underwriters to think again. Together we created a compelling pitch, explaining in detail why the claims had occurred and what the law firm had done to ensure they wouldn’t happen again.
I’m glad to say that our advice paid off. After submitting its proposal and following up with a number of face-to-face meetings with underwriters to help put their minds at rest, the law firm received not one but several offers of cover, which meant the imminent threat of its closure was lifted.
With the October 1 renewal deadline fast approaching, my advice to law firms struggling to find insurance is to not panic – there is hope. Your best bet is to find a broker who will take the time to understand your company’s unique needs and can advise you on the most effective to find the all-important cover you need to stay in business.