How to manage your risk as workloads increase
IPA Insolvency Practitioner newsletter, June 2024
Article by Thomas Fahey, Associate, Lockton.
With the number of insolvencies on the rise and workloads increasing, practitioners are increasingly likely to suffer claims under their professional indemnity insurance (PII).
Below, we explain how proactive risk management can help to reduce incidence of claims, and ensure you’re adequately protected should a claim occur.
Insolvencies driving higher workloads
Economic downturns, market disruptions and global events have all contributed to an uptick in insolvencies in the UK in recent years. According to the most recent data from the Insolvency Service, April 2024 saw 2,177 insolvencies of registered companies in England and Wales, an increase of 18% on the same month in previous year (1,838). Meanwhile, the 25,000 insolvencies in 2023 was the highest number for two decades.
The surge in insolvencies is driving demand for insolvency practitioners’ expertise. But while this is positive news for practitioners, it also brings challenges in the shape of an increasing workload of ever more complex cases. As caseloads increase and timelines shorten, many practitioners will already find themselves maintaining a delicate balance between efficiency and thoroughness. With every decision and action subject to scrutiny, the stakes are high.
PII under pressure
From an insurance standpoint, the surge in company insolvencies presents unique challenges and considerations for practitioners.
With larger and more complex insolvency cases, firms’ PII policies are likely to come under increased pressure. Firms should expect an increase in claims and notifications made under their PII policy, including those relating to:
- Mistakes in work for clients
- Loss of documents or personal data
- Accidental breaches of confidentiality
What’s more, current policy limits are sometimes structured on an aggregate basis. As demand rises for practitioners’ services, these limits may prove insufficient.
Risk management best practice
To navigate this changing landscape, it’s vital to pursue a proactive approach to risk management. In practice, this means reassessing your insurance needs to meet the demands of increased appointments and potential liabilities.
Potential strategies include:
- Opting for an any-one-claim limit – this may provide better coverage, protecting you against potential risks
- Stay aware of any regulatory changes, industry trends and emerging liabilities
- Fostering a culture of continuous learning and innovation
- Remain vigilant in your ongoing insurance coverage management
By prioritising risk management, insolvency practitioners can position themselves for success amid uncertainty. In doing so, they uphold the integrity of their profession while safeguarding clients’ interests and financial well-being.
Further information
As a specialist broker operating in the PII market, Lockton can offer advice and assistance with any queries.
For any further information, please visit our Professional Indemnity Insurance page or contact:
Thomas Fahey, Associate
Please note that guest content does not necessarily represent the views of the IPA.