Historically, renewing a professional indemnity insurance policy or seeking alternative options at renewal has been a fairly straightforward process for construction firms. The firm would simply provide a proposal form, then wait for a quotation to be presented.
However, as market conditions continue to harden, taking a different approach this time around could well lead to a more positive result at renewal.
While approaching multiple brokers does have its benefits, including allowing you greater market access, limited insurer capacity means that approaching three or more brokers at your renewal could potentially hinder, rather than help you.
Benefits to approaching multiple brokers
Market access – No single broker will have access to the entire marketplace, so carefully selecting your broker will help you gain access to the full range of insurers offering PII for your class of business. Finding out which brokers have tied arrangements/schemes will help narrow this down.
Performance – Approaching multiple brokers can help you assess the performance of your current advisor in relation to several key areas such as: advice, service policy cover, price, and innovation.
Poor performance on a broker's side will typically involve badly-managed renewals, unsatisfactory outcomes, poor handling or lack of proactivity on a claim, or increases in cost and/or loss of cover.
Innovation – Complacency can stifle innovation. A broker review will stimulate fresh thinking in relation to the treatment of risk issues facing your organisation, insurance programme design, claims management, and service proposition.
Negatives of approaching too many brokers
Inconsistent presentations – When approaching multiple brokers, sometimes the information provided to those brokers can differ, whether that be forms, questionnaires or claims information, which in turn conveys an unclear message to underwriters.
If an underwriter receives a submission from multiple sources, they may be less inclined to quote, especially if there are inconsistencies in your submission.
Reduction in market capacity – Due to the reduction in capacity across the PII market, the pool of insurers available to construction firms has significantly decreased. This has caused the remaining markets to see a vast influx of enquiries. Therefore, when an underwriter sees a risk from multiple brokers, the likelihood of them being successful and winning the business is also reduced.
Market blocking – The majority of insurers in the UK PII market work on a 'first-come, first-served' basis, this means that whilst one broker may spend time with you to understand the business prior to approaching the market, another may simply email your proposal form to their contact list, thus blocking the broker that understands your business from negotiating on your behalf.
Qualifying brokers to partner with
When considering which brokers to speak with, there are three key traits to look out for:
- Market access
- Service offering
Expertise – Many brokers placing PII will not necessarily be specialists in the class, so assessing the qualifications of your broker partner is important in securing the most favourable outcome for your business.
- Does the broker have specialist knowledge of your profession as well as PII?
- Do they have the capabilities to place your business?
- Will they take the time to understand your business?
- Are they proactive or reactive?
A qualified broker will be able to easily demonstrate their knowledge and experience. For example, Lockton is privileged to represent more than 350 architects, engineers and contractors across the UK, accounting for over £35m in Gross Written Premium (GWP) into the UK market.
Our dedicated team has extensive experience working with clients across multiple jurisdictions, and a
detailed understanding of the specific challenges faced by an architect, engineer, and construction firm from a contractual and regulatory perspective. We offer bespoke insurance solutions to assist clients that operate in various jurisdictions.
Market access – A broker's market access is a crucial element in sourcing the most favourable outcome for your business' renewal.
- Does the broker have access to the open market, or are they restricted by scheme facilities?
- Does the broker work directly with your insurer or do they utilise another broker to access certain insurers/facilities?
- Do they have access to insurer meetings if required on the more complex risks?
Lockton's team is known and respected by leading insurers in the PII space. We have access to underwriters that can cover even the most complex risks.
As the world's largest independent insurance brokerage, Lockton isn't restricted by any insurer scheme facilities. We have access to the full open market which ultimately allows us to serve the best interests for our clients.
Lockton does not approach any other brokerages in order to gain access to certain insurers/facilities, however many brokers will approach us in order to utilise our market access and relationships.
Where beneficial, we can offer face-to-face insurer meetings. Being able to directly speak with the insurer underwriting your risk has many benefits including the presentation and understanding of your risk, and helps to build a long-standing and mutually beneficial relationship between all parties.
Service offering – The majority of brokers will often provide additional services further to the placement of a business' Professional Indemnity policy, which may include contract and collateral warranty reviews, claims handling, risk management and data analysis.
- Do brokers offer in-house services or are they outsourced?
- What are their response times for contract and warranty reviews?
- Are these services included within the policy premium or at an additional cost?
- How effective/efficient is their communication when handling claims?
- Do brokers offer peer group comparisons for excess, limits and rates?
Claims handling is naturally a service all clients would prefer not to use, but it is an essential component of your insurance policy, which is why the service that your chosen representative provides you with is vital.
Lockton's team of over 80 claims associates are based in our London office and are fully integrated with the placement teams. Of this cohort, a large number focus exclusively on Professional Indemnity claims. The co-location and integration of our claims team is a key differentiator for Lockton and means that the broking and claims services are seamless from our clients' perspectives.
If your PII renewal is due shortly and you wish to have a conversation about this year's renewal process, please get in touch.