How much does professional indemnity insurance cost?

How much does professional indemnity insurance cost? The cost of a professional indemnity policy will depend on how the underwriter perceives the risk that is presented to them.

There are a number of factors that will be taken in to account when assessing the risk and deciding on the premium i.e. the professional indemnity insurance cost:

Trade – Certain trades are considered as a much higher risk than others and underwriters will look at the historic claims experience for that sector when deciding on a pricing strategy.
Size of firm – One of the major factors that determine insurers’ rating and underwriting criteria is the size of the practice. This is mainly established in two ways, the number of directors and staff and the gross annual income of the firm. This will affect the professional indemnity insurance cost.
Qualifications and experience – Underwriters will look for a mix of qualifications and experience and a CV of the directors or principals will often help underwriters when they assess the risk.
Potential for loss – This is really linked to the trade. The industry and individual insurers will have many years of claims experience for various trades and will use this knowledge to rate different trades from a Professional Indemnity perspective.
Contract sizes – There is a direct relationship between the size and complexity of the job and the exposure. Careful consideration would be paid to such work carried out for US or Canadian firms.
Retroactive exposure – Does the firm have an exposure to claims arising from past work, whether in the current firm or a former practice?
Claims experience – The claims experience is an important determining factor in the assessment of risk. This information usually reflects the type of work carried out by a firm. It also reflects the quality of the firm’s work, staff, internal risk management and experience.

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