Enter the dragons' den

It's a bit like a pitch to would-be investors. You need to take a look at your firm's risk profile as if it were a product, identify its best features, and sell it to underwriters.

But you'll have their attention for only a limited time as they are examining thousands of other 'pitches' in an intense and concentrated time period. How will you grab their attention? What will make your proposal stand out from the rest? And how will you avoid the dreaded 'I'm out'?

firms will be renewing their professional indemnity insurance (PII) this October, and many have already begun the process of looking around. The season is frenetic, and while the number of firms unable to secure cover is expected to be very small, there's no doubt that many will pay more than they need, for want of planning and effective presentation.

As this year’s season approaches I was struck by the findings of the recent Managing Partner snapshot survey on risk management and PII. Disappointingly, 43 per cent of respondents said their firm had done nothing since its last renewal to improve its risk profile. No wonder 49 per cent expected a premium rise. 

The survey offered some evidence, too, of risk management being regarded as something that somebody else at the firm takes care of, rather than a state of mind that permeates through the firm, at the heart of every client interaction. Active resistance was cited in some of the responses. 

But insurers have to make a judgement on the strength of risk management in firms. We see the evidence of this in the terms offered to our members through our group PII scheme, as underwriters like the attractive risk profile of our ISO quality accredited membership.

Getting the best outcomes

• Unrated insurers: Just don't go there. The Law Society's practice note of July 2014 is unequivocal on this;

What kind of work are you doing, and what values are involved? Look back and also forwards when assessing. Keep in mind the 'claims made' policy and limitation period. Remember your policy may aggregate claims from related transactions.

What level of excess feels comfortable? A higher excess can reduce premium, but it's a judgement call based on your claims record and your cash flow;

• Put your best foot forward: Demonstrate you've reviewed your risk management processes and highlight any improvements made. Be armed with all relevant information on your claims history and provide answers on anything that brokers or insurers are likely to question - don't wait to be asked.

Provide plenty of information at the outset. Your proposal may receive limited attention because of the febrile nature of the renewal season, so it makes sense to do all you can to make it stand out. Include your risk policy statement and give an insight into your culture, management structure, internal controls, and your approach to recruitment, training, and quality.

Submit your proposal early - but only when it is as compelling as you need it to be. Chat to your broker ahead of submission to make sure you've covered everything. This will give you more time for negotiation; and

• Show that you understand the topical risks: Cybercrime and social engineering present a huge and growing threat to firms, with risks to confidential client information and to client money. This is high on insurers' agendas at the moment, so a statement from you on how you are addressing these risks can only be helpful.

There have been cases of client data being 'held hostage' for ransom by hackers or stolen after firms have unwittingly allowed malware into their systems. Social engineering has seen client money stolen when firms have been persuaded to disclose electronic banking log-in and payment details to callers purporting to be from the firm's bank.

Check with your insurer that they regard these risks as covered (on a third-party basis) by minimum terms, and consider whether you need to purchase first-party cover to protect the firm's own money.

Your appointment with the dragons is getting closer, but there's still time for you to sharpen up your pitch and secure the best terms you can. SJ

Chris Marston is CEO of LawNet @LawNetUK

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