England 12/04/2012 – In an effort to cut costs some companies are cancelling their PI cover
In the UK, for some professionals buying PI cover is obligatory. The law is designed to protect clients from the negative effects of one of their professional advisers making a mistake. In the UK, it is obligatory for professionals such as solicitors, financial advisers, architects and many other traditional advisory professionals to have such cover. This obligation either is as result of the law of the land or is a requirement of their official trade body. In many cases, if a firm who is a member of their trade body allows their PI cover to lapse they will find themselves being expelled from their trade body or blacklisted.
A recent example of a company that has let their PI insurance lapse and has suffered the consequences is that of Equifund Ltd. The Financial Services Authority notified the firm on 9 February 2012 that they were removing all of its regulated activities forthwith. The reason stated was that the firm had allowed its PII insurance to lapse. Equifund are in the process of rectifying the problem.
However, there is growing evidence that firms are allowing their PI cover to lapse in an effort to save costs. In many cases, these firms do not realise just what a false economy doing so is.
The hidden costs of allowing PI cover to lapse
Quite a few firms simply do not fully realise the risks that they are taking by doing so. They are not seriously considering that should one of their clients need to sue them for losses they could end up going out of business. In addition, they do not factor in the fact that an awful lot of consumers will not use professionals who do not have proper professional indemnity cover. To consumers the fact that firms do not take their responsibilities seriously is a big black mark, which puts them off buying services from a firm.
Hensure have been selling PI cover for over 30 years and have seen early signs of companies not taking their responsibilities in this area seriously. However, the majority of their clients do and appreciate that they can buy this kind of insurance from Hensure at an affordable price.
54-56 Nantwich Road
Zip: CW2 6AL
Tel: 01270 758070