By Legal Futures Associate Miller Insurance
Whilst a firm’s claims history plays a central part in its attractiveness to insurers and premium calculation, the way in which claims are presented can make a huge difference. Miller’s Claims Executive, Mark Durkin provides five practical actions below.
1. Present a comprehensive and clear proposal form submission
Whilst we try and emphasise this at the start of every renewal season, unfortunately, we still see a large amount of incomplete proposal form submissions.. Be concise but comprehensive. Think about what differentiates your firm – and do not be afraid of tackling difficult aspects of your firm’s profile. Do not think that underwriters might not notice. Better, tackle them head-on, explain them, and demonstrate why they are not the issue that underwriters might at first think.
Remember also, that insurers are not just interested in the firm as it is today, but also any firms you have merged with/acquired – particularly where you have assumed successor practice liabilities.
2. Include a clear and up-to-date claims summary
It’s important that your claims summary is accurate and that you highlight any instances where the claim summaries do not accurately represent your firm’s history and risk profile.
Insurers do not have a uniform approach to recording claims. Some only include reserves or payments that will fall to insurers; others include excess payments within the figures. A further issue to look out for is insurers occasionally not including the excess in the claim or claimant costs reserve.
Your broker can assist you in obtaining and understanding the up-to-date data and present it in the best way. As the main renewal season is particularly busy, we encourage you to plan and allow up to 5 working days for insurers or your broker to provide claims data.
Claim summaries should generally go back 6 or 10 years and be as up-to-date as possible at the date of the proposal form. It is also important to report any material developments during the renewal discussions as you will have to sign a no-material change declaration before the insurance can be bound.
3. Evidence your learning from claims
Include a summary of significant claims in a cover letter or a supporting document. This should:
- provide summary details of the claim
- identify the underlying cause(s) and any unusual mitigating factors
- set out actions taken to address the risk since then. Do not present ‘the solicitor no longer works here’ as a risk mitigation! Even where the firm has been exonerated, there may still be learning points – firms that show a willingness to learn from any event are more likely to impress.
As your broker, we can advise you on what claims should be considered ‘significant’.
4. Use your data to tell a story
If your claims buck the wider trends of the profession (in a positive way), tell that story. If, for example, you have a large property department, but it generates fewer than average claims, and low-value ones at that – that is a strong differentiator – particularly when you can explain why the way you work produces that result.
It is particularly impactful if you can additionally evidence that risk improvements have prevented similar incidents. Examples may include prevented attempts of fund inception fraud or how improvements in recording key dates have ensured that deadlines have not been missed when the fee earner is out of the office.
5. Build a relationship with your (prospective) insurer
Insurers understand the long-tail nature of claims against law firms and will look at matters over the longer term and generally do not overreact to individual claims. What is important is whether the law firm is profitable over the long term and whether lessons have been learnt.
Insurers welcome long-term relationships and have the opportunity to build a premium pot which can help smooth the impact of individual claims. However, this loyalty must benefit both sides.
In any meetings with underwriters, you can inspire confidence and differentiate your firm by demonstrating your command of the firm’s claims history and what lessons have been learnt.
Claims do play an important role during renewal discussions. However, if firms show a proactive approach to risk management and how they have implemented actions to prevent future claims, insurers can view this positively. Miller is here to help. Get in touch with us today for further guidance.
