INTHEBLACK November 2021 - Magazine - Page 67
SPECIAL ADVERTISING FEATURE
PROFESSIONAL INDEMNITY
INSURANCE: AN ESSENTIAL
RISK-MANAGEMENT TOOL
FOR YOUR PRACTICE
AS THE PROFESSIONAL INDEMNITY INSURANCE MARKET CONTINUES
TO GROW IN COMPLEXITY, IT HAS NEVER BEEN MORE IMPORTANT TO
CHECK THAT YOUR PRACTICE IS ADEQUATELY PROTECTED.
T
HE PROFESSIONAL INDEMNITY (PI)
insurance market is changing rapidly.
According to the latest data from the
Australian Prudential Regulatory Authority,
gross written premium (GWP) for PI cover
increased by 23.2 per cent in the past 12
months, largely driven by the rising number
– and cost – of claims.
In this challenging post-JobKeeper
environment, PI insurance may be more
valuable than ever to public practitioners,
says Anton Vucak, partner at Hall & Wilcox.
“People are more conscious of their
finances, so if something goes wrong,
they’re exploring what the consequences
are and who they’re able to recover their
losses from,” he says.
“If you do get a claim made against you
and you don’t have the appropriate cover,
it’s a very costly and complicated process.”
UNDERSTAND THE PARAMETERS
OF YOUR COVER
To determine whether your PI policy
provides sufficient cover for your practice,
Vucak recommends assessing your risk
profile on an annual basis, in collaboration
with your broker or insurer.
“I think the most important factor is the
extent of the coverage,” he says, explaining
that he has encountered situations where
policies have had a A$5 million limit, but
claims have been filed for A$10 million,
leaving policyholders liable for the
difference.
Understanding policy exclusions and
restrictions is also critical, as is staying
within the parameters of your expertise.
It can be all too easy for sole practitioners,
in particular, to engage in activities not
covered by their policy. Vucak says in such
instances, people should be comfortable
explaining their professional limitations to
clients and referring them to a third party.
He adds: “If you’re extending your scope
of work as your business improves or
increases, make sure you consider that
your insurance also needs to increase.”
ALLEVIATING STRESS
If a claim is made against your practice,
the first step is to make contact as soon as
possible with your broker or insurer. Vucak
explains that if your policy is written on a
“claims made and notified” basis, any delays
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indemnity insurance quote from
Fenton Green
may culminate in the policy period lapsing
before you lodge the claim.
“If something does go wrong, there’s no
point hiding under the covers,” he says.
Likewise, he advises against defending
yourself when first alerted to the claim,
when emotions are often heightened.
“Notifying your insurer and broker will allow
you that opportunity to talk through it and
make sure the right process is followed.”
Establishing diligent record-keeping
systems within your business is beneficial
as a pre-emptive measure, so if a claim
does arise, you can share as much
information as possible with your insurer.
“Professionals in the accounting world
especially need to have an adequate
paper trail,” Vucak says. “Making sure they
can substantiate what they did, how they
calculated taxes, what factors they took
into consideration, so all the things that
may be raised later on can be produced
if required.”
For Vucak, having a good relationship
with your insurer or broker can reduce
stress in several ways. The right policy will
lessen the financial strain of defending a
claim while providing access to expert
guidance on what is often an unfamiliar
process – leaving you free to continue
regular business activities.
“If you’re fixated on that claim, then
potentially you’re not paying attention to
the other clients you have, which may cause
other claims,” he says. “The value of having
somebody there to help you through the
process cannot be overstated.”
intheblack.com November 2021 67