Professional Indemnity (PI) Insurance Market

By Paul P Berg

Where are we now - and the future?

The Professional Indemnity (PI) market is currently in its soft phase, with insurers still placing emphasis on volume at the expense of profit.

And what of the future? It is certain that at some stage the market will enter harder conditions. There is uncertainty as to when the market might harden and by how much. Invariably the deeper and more prolonged the soft market the more pronounced the adjustment will be when it comes.

Events in insurance, as in life, are powerful and unpredictable. What future events might conspire, individually or collectively, to prompt a return to harder market conditions? The following is a list, by no means exhaustive, of the likely culprits:-

1) The Credit Crunch - will have three adverse effects on the insurance market. First, there is likely to be an increase in the cost of capital as its availability becomes scarce. Second, a reduction in the asset base of major insurers as sub-prime losses erode balance sheets - further reducing the capital available required to underwrite risks. Third, an increase in credit crunch liability claims as those who have suffered losses (home owners, shareholders etc) seek to recover from professional advisers, company directors etc.

2) Investment Income - a combination of increased stock market volatility and reducing interest rates could see insurer's ability to generate investment income curtailed.

3) Environmental Factors - after two relatively benign years of (insured) natural catastrophes, could 2008 see a return to more usual levels of claim - particularly in relation to the hurricane season?

4) Economic Factors - a downturn in the economy hits the insurance industry in two ways - invariably an increase in the cost of claims allied to a reduced pool of economic activity from which to collect premiums.

And finally - unforeseen events aside, our current prediction is that whilst the market is unlikely to harden during 2008, prices could well start to rise towards the start of 2009.

As ever, forewarned is, or should be, forearmed...

Griffiths & Armour Professional Risks acts as manager for the professional indemnity division of Griffiths & Armour.

Griffiths & Armour Professional Risks Ltd is an appointed representative of Griffiths & Armour which is authorised and regulated by the Financial Services Authority.

All rights reserved. This document does not present a complete or comprehensive statement of fact or the law, nor does it constitute legal advice. It is intended only to highlight issues that might be of interest to Griffiths & Armour clients; specialist legal advice may be required where appropriate. Where links to third party websites are provided, we accept no responsibility for their content.

Paul Berg is the owner of Griffiths & Armour, UK's leading independent indemnity insurance brokers, risk managers and financial advisers. We specialise in professional indemnity insurance and professional liability insurance for the construction and legal professions.

How a Surety Brings Peace of Mind

By John Bows

Surety Definition

The word Surety is a noun pronounced sur- e- ty. Surety is a guarantor, which will assume responsibility of another person (principal) obligations if the principal cannot, or does not meet them. The term Surety has existed for thousands of years.

Example of Surety

Have you ever heard the saying "don't ever be anyone's Surety", what exactly does it mean? You would be held liable to guarantee the obligations of the person you where acting as Surety for. If you were acting as a Surety for a particular obligation of another (Principal) and the obligations were not met, you would have to meet those obligations on the principals behave, this is known as Surety. Surety has been around for thousands of years and is the oldest form of insurance.

How a Surety brings peace of mind

Let us suppose for a moment that you were an owner of a large piece of land, and you wanted to develop it. After years of research, money and time, you decided you wanted to build a commercial building on that land. You hire a contractor to complete the project. At first, your contract is doing a great job and everything seems to be going smoothly. After six months of construction, the project starts running behind schedule and you have failed inspection. The inspector tells you that the foundation is not up to code and it needs to be completely redone.

On top of that, the contractor walks form the job because the project has become unprofitable. What do you do and where can you turn to? That is where a Surety would come into play. If you made that one of your requirements for the contractor to obtain? The Surety would do one of the following things they would hire a new contractor, reimburse you monetarily, or finish the project. The Surety would take up the obligations of the principal. After the Surety has settled the claim the Surety would than go after the principal for the loss caused to the Surety.

Surety Bond types can be confusing you can learn more about Surety Bonds with more up coming articles Thanks John Bows Integrity Bonds Inc

Filing an Insurance Claim? Expect to Fight Your Own Insurance Policy

By Jane Pytel

Unscrupulous insurance companies will use your insurance policy as a basis to deny claims rather than as a basis to pay them. Flawed, faulty, or unfair insurance policy interpretation is characteristic of the widespread and out of control tactics insurance companies will use to delay, reduce, or deny payment of your claim.

When you purchase insurance, you are entering into a contract between yourself and your insurance company. This contract, or policy, establishes all terms and conditions of your insurance coverage.

An insurance contract is considered a contract of adhesion. Simply put, this means that the carrier draws up the policy and presents it to the policyholder, the insured. Because the insured has no input to amend the terms of the policy the burden of ambiguity is placed on the insurance company. The benefit of doubt must be made to the favor of the insured.

But insurance companies successfully bank on the chances that the majority of policyholders do not understand their rights. To the contrary, insurance companies will assert that there is no flexibility beyond their interpretation of your policy. When you file a claim, these companies will seek to delay or deny your claim based on what it considers any perceived or contested policy ambiguities.

As an example, assume that you have filed a claim for damages to your vehicle caused by a traffic accident. In the course of your claim you are advised by your adjuster that your claim is under additional investigation because a specific portion of your policy excludes coverage for portable equipment which is not permanently installed on or in the vehicle. You counter that permanently installed is vague and that you presented your vehicle to your agent for inspection at the time the policy was purchased. Further, you disclosed all equipment installed on the vehicle when the policy was issued. You have a reasonable expectation that this equipment is covered under the terms of your contract.

In this instance your insurance company is delaying payment of your claim by redefining the language of the contract. You have adhered to your obligations of disclosure, and you have paid your premiums. What should you do?

You need to do your personal homework. Review your information. Have you studied the policy language? What would the prudent and reasonable person conclude? Is your argument valid? Did you adequately present all details relative to your vehicle at the time you insured it? Did you have a legitimate expectation that the subject equipment was covered?

If you believe the facts support you, continue to pursue your position. Your best weapon in protecting yourself against questionable claims practices is to know your policy.

• You must study and understand your insurance policy. Your insurance company assumes you will not do this.
• You have a duty to disclose all relevant facts at the time you apply for your policy or your policy can be declared void.
• Your insurance carrier likewise has a duty to fairly apply the terms of the contract.
• Be assertive in your demands to effect a satisfactory conclusion to your claim.
• Insurance companies will search for claims specific ambiguities in your policy to their benefit in order to avoid payment of your claim. They must be able to support their conclusions.

Jane Pytel is a former insurance investigator and author of an amazing new e-book, "Power to Profit" that will take you on an inside journey from the depths of insurance company bad practices to the glory of beating them at their own game. Visit Jane at http://solutionsforyourinsuranceclaim.com