Assessing the Risk
It is important to appreciate insurer’s considerations when assessing your risk. It will assist you in understanding what is material to an insurer and what needs to be disclosed beyond the questions in the proposal form. Failure to disclose information that insurers investigating the claim deem to have been material is a serious risk.
Insurers consider the proposer’s :-
- Claims record, including circumstances that came to nothing
- Commission/Fee income
- Classes of insurance placed – any specialist services
- Agencies and binding authorities
- Experience and qualifications of directors and staff
- Territories and Jurisdiction outside European Community
- Size and nature of clients
- Limit of indemnity
- Excess
- Other special information
Proposal form – an important consideration
Proposal forms play a more important part in professional indemnity insurance than in most other classes of insurance. They are required to be completed in full, every year, and they are relied upon absolutely by insurers as a true representation of the material information upon which they offer their terms.
Inconsistency between what is disclosed in the proposal form and what is discovered upon investigation of a claim can result in the policy being voided back to inception. See Part 2 -Proposal Forms for a detailed explanation.