Safety in numbers
Advice for ICAEW Members Against Rising Professional Indemnity Rates in a “Hardening Market”
Events in recent years continue to have a significant effect on the professional indemnity (PI) market ‒ creating a lack of supply and driving premiums up – but there is better news for ICAEW private practice members working with Marsh Commercial to secure PI cover.
First, some context. The professional indemnity insurance market has been hardening – which means the demand for cover is not matched by supply – for some time. This has been driven, in part, by the Grenfell Tower disaster and the collapse of construction giant, Carillion. A rise in claims has naturally seen premiums increase and left fewer insurers willing to be involved in the PI market, creating a lack of supply.
This has had clear knock-on effects for accountants buying PI on the open market. Many face significant rate increases when the time comes to renew cover – particularly those renewing with recent claims.
Better News for ICAEW Members
There is, however, much better news for ICAEW private practice members. Marsh Commercial (formerly Bluefin Professions) worked closely with the ICAEW to create an accountants professional indemnity scheme that operates as a separate “market” or “risk pool”. ICAEW members benefit from a level of insulation against the rising premiums currently affecting the wider market. This is one of the major benefits of taking part in a scheme, rather than relying on the open market – but it is important to understand why.
- Firstly, our insurer, QBE, works with us in full knowledge of the overall risk profile of ICAEW private practice members. Indeed, it’s hard to imagine any insurer entering into an agreement to back a membership scheme without first carrying out due diligence and risk profiling. That means a scheme insurer, like QBE, is more comfortable than an open market insurer in taking on some higher risk work – because it knows that, overall, higher risk will be balanced out by a majority of lower risk clients.
- That safety in numbers applies to ICAEW members taking part in the scheme too. Today Marsh Commercial provides protection for over 4,500 ICAEW private practice members, through a policy designed in conjunction with ICAEW. That strength in numbers enables us to negotiate improved terms with insurers ‒ so, the recent deal to bring QBE on board enabled us to ensure the scheme offered level terms for the majority of members and protection against the vagaries of the external insurance market. As a result, ICAEW members working with Marsh Commercial are unlikely to experience the kind of premium rises that are now commonplace in wider PI markets – so now is a good time to ask for a quote from the ICAEW’s appointed PII provider, as part of ICAEW Member Rewards.
Wider Benefits for ICAEW Members
Of course, being able to rely on stable premiums is not the only benefit of taking part in the ICAEW scheme operated by Marsh Commercial. A selection of additional benefits and enhanced terms include:
- Interest-free instalments to spread the cost of insurance premiums are available via Close Brothers, our premium finance partner.
- A six-year run off facility means any ICAEW private practice member ceasing to practice can purchase a block policy to protect them for a full six-year period without having to worry about annual renewals.
- An optional extended policy term of up to 18 months can help members to tie renewals in with other insurance renewals or financial year ends, or gain some breathing space by moving renewal dates out of the busiest accounting period.
- Defence costs are in addition to the limit of indemnity, which helps to ensure that potentially high defence costs do not exhaust cover before any damages are paid.
- Cyber liability is included at £250,000 as standard, which may be particularly helpful in protecting against some of the cyber risks associated with increased home working . In addition, a full cyber policy for ICAEW members is available, with more information here.
- Members can secure packaged cover including a range of policies – from PI and office insurance to cyber, legal expenses, crime, pension trustee liability, employers liability, public liability, and corporate legal liability. This helps to eliminate gaps and overlaps in cover, create a single renewal date for those covers, and tends to be more cost effective than standalone policies.
- A dedicated ICAEW team is on hand at Marsh Commercial to support members with everything from risk advice and renewals, while our specialist claims handlers are expert in dealing with accountancy claims. We are very much here to offer help and support at this challenging time.
COVID-19 and PI
A lot of you are asking how the coronavirus pandemic might affect your PI cover. The truth is, we don’t know yet. While some insurers have highlighted exclusions of cover for COVID-19 this has mainly related to business interruption insurance – and no such clarity is yet available when it comes to PI.
Rest assured we are working with insurers behind the scenes on your behalf to identify, mitigate, and clarify any changes to PI cover as a result of COVID-19, so our advice is to stay in regular contact with your account handler during this difficult time.
If you would like to find out more about the ICAEW PI scheme, receive advice on your current PI policy or ask a question about cyber protection, please get in touch with our ICAEW team on 0345 894 4684 or email firstname.lastname@example.org.