What your PI renewal tells you about your firm
The premium is the insurance market’s price for the risk in your back book. It also shows each year how a buyer is likely to view your firm.
The premium is the insurance market’s price for the risk in your back book. It also shows each year how a buyer is likely to view your firm.
Professional indemnity renewal is the one external assessment a small firm receives every year. Use it as information about your firm.
The underwriter prices the likelihood that somebody complains about advice you have already given, and the likely cost if they do. They use a proposal form, your claims history, and the shape of your business: what you advise on, how much of it, to whom, and what is in the back book.
A buyer’s due diligence asks almost the same questions for the same reason. The underwriter puts a number on the answers and gives it to you every twelve months.
Where your historic risk sits. If the questions concentrate on a particular activity or period, that is where an acquirer's file review will concentrate too.
Whether the market thinks your files are in order. Excesses and exclusions express the underwriter’s opinion of the files in money. An exclusion applied to a class of past business is a finding that a buyer’s review is likely to make again.
What it costs to carry your own risk. Add up the premiums for the last five years. In a staged arrangement where cover moves to the host firm, this recurring cost stops being yours.
When a firm stops advising, it needs cover for claims made afterwards about advice given before. Run-off cover is bought for a period of years, it is expensive, and the cost falls when your income stops.
Whatever route you take, find out early what run-off would cost you and who will pay for it. It can change the economics of a retirement decision materially, so do not leave it until the end.
Ask any acquirer who carries the cover for advice you have already given under their structure, and for how long. Ask us too. It is one of the five questions on our list.
Questions to ask about each buyer’s plans for your clients, alongside the price.
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How to write down the client knowledge that is not in the file, so the next adviser can use it.
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Cutting to three days a week reduces your advising time. The work of running a regulated firm stays the same.
Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.