Most labs have seen their professional indemnity insurance premium spiral ever upwards over the past couple of years, but more cost may not mean more service
The issue of rising insurance premiums - particularly professional indemnity (PI) costs - is yesterday's news. Most labs have seen their PI premium spiral ever upwards over the past couple of years, so much so that it's probably a close second to IT spend on the profit and loss account.
Insurers have been guilty of slapping harsh premiums on all testing laboratories, presuming the same high risk factors apply - regardless of sector, risk exposure, or best practice procedures, says Howden.
Many smaller labs have been forced into exposing themselves to greater risks, accepting inadequate wording and restrictive exclusions just to be able to afford any sort of PI cover.
The bad news is that, while the insurance market is starting to flatten out after a prolonged period of uncertainty, many insurers are likely to continue to view all labs as high risk indiscriminately.
The good news is that labs can engineer a more competitive premium and comprehensive cover by following a few golden rules:.
Choose the right broker to source your cover. Does the broker specialise in PI and are they experience in sourcing cover for testing laboratories? If not, find one that does specialise and knows your business - it could mean the difference in securing accurate cover rather than accepting inadequate wording, as well as a significant difference in premium.
Don't know where to look? Professional bodies and associations such as Ukas are a good place to start.
Will the broker meet you face-to-face and take you through the process? Remember, you're paying for the service so make sure you're happy with it.
Make sure the broker places your business direct with the insurer, not through another broker. Insurance is a relationship-based business and the better the broker knows the insurers, the more likely they are to secure a better premium for you.
Can the broker provide risk management advice? Remember, the broker is the expert in insurance and should be able to give you sound pointers as to what insurers will consider positive or negative risk management.
Will the broker ensure your business is considered as an individual entity, or will you be lumped into a group scheme? Are you really prepared to pay for someone else's poor claims record?. Howden say that under its Ukas professional indemnity scheme, all Ukas accredited testing laboratories can access a tailor made PI policy that reflects their own personal exposures, resulting in more value for money and peace of mind.
Can the broker secure you PI that provides full civil liability cover? This is commonplace for professions such as solicitors, accountants and surveyors but rare in the case of testing labs - apart from the Ukas PI Scheme. Make sure the broker helps you through each stage of the renewal submission.
The broker is the expert, so don't accept anything less than a face-to-face service.
Give as much information as you can to the broker they can present your business in the most positive and accurate manner to the insurer. And if the broker doesn't press you for information, ask yourself whether they are really doing the best job for you.
If you have made notifications of claims in the past, ensure your broker is kept up-to-date so that they, in turn, can keep the insurer fully informed.
Undertake a regular survey of what's happening in the insurance market - continuity of insurer is important, but at what cost? Again, the right broker should offer this as part of their service.
Put in place a solid risk management strategy.
Appoint a senior member of your business to develop, implement and oversee your strategy - and make sure it's a regular item for review at board level.
Ask your broker to lead regular risk management seminars for your team and use them to vet any contracts that you enter.
PI insurance provides cover in respect of legal liability.
It is vital to manage the liability incurred by way of contracts entered in to as well as your internal working procedures.
Remember, the more the insurer is assured that your business has done everything possible to negate the likelihood of a claim, the more likely it is that you'll get a competitive quote.
Following the above steps should help you to obtain a far more competitive premium for your PI policy without stinting on the depth of cover it provides.
Chose and use your broker wisely - and if you don't think you're getting value and service for money, perhaps it's time to consider a move.
