Changes in the Professional Indemnity Insurance market

Nov 25, 2019

The Chartered Accountants Ireland ("the Institute") is aware that there have been some changes in the Professional Indemnity Insurance (PII) market over the last 12-18 months which would mean that firms find it more challenging (or time consuming) to renew cover than they have previously.  It could also mean that firms find that their premiums increase.  It is unclear whether this is a 'hardening' of the market or price correction, but the Institute understands that insurers are reviewing more critically the risks they are willing to accept and the price they will set cover for.  This may affect, in particular, firms with a claims/notifications history; those involved in ongoing legal action and/or firms engaged in activity which insurers perceive as more 'high risk' (e.g. tax mitigation schemes, investment advice, insolvency, M&A work).

The Institute understands that the market for accountants' PII could be particularly limited in Q4 of 2019 as some insurers cease to write new policies or renew business during the final months of the year.  As always, the Institute recommends that firms prepare early for their renewal and that they take advice from a trusted and reputable broker or other advisor in taking out their insurance.  It is recommended that firms discuss their placement strategy with their broker to ensure that they have access to a number of different insurers.

Firms have an obligation to make a fair presentation of the risk on taking out or renewing cover.  Therefore, in order to safeguard the indemnity available for a claim should it arise, it is essential that firms are open and transparent with their insurer / prospective insurer when taking out or renewing cover as to:

  • The activities they undertake;
  • Their claims history and any potential claims (or grounds to suspect a claim - 'circumstances');
  • Their disciplinary / regulatory history.