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Business and management consultants offer a broad scope of services across a wide range of sectors.
There are no legal or regulatory requirements for consultants to take out professional indemnity (PI) insurance, but there’s an ongoing move towards clients stipulating such cover is in place as part of their terms of business.
Similarly, more consultants are beginning to realise the value offered by a PI policy, especially in respect of the access it provides to legal expertise.
Business and management consultants are engaged by clients to improve commercial performance and drive operational efficiency. This work takes them into every part of an organisation, including everything from HR, marketing, and compliance to business strategy, IT and finance.
In addition to the varied scope of the services, the size and structure of consultancy firms is also very different, ranging from sole traders all the way up to multi-national corporations.
PI cover may not be mandatory, but it offers important safeguards and risk management services that will help firms mitigate the risks they face.
Claims relating to consultancy tend to be low in frequency but high in severity. Consultants are often responsible for enterprise-wide turnaround projects. They serve as interim corporate executives, make commercial and operational decisions and bear significant liabilities if they act improperly and/or negligently.
It’s not uncommon to see claims arise from disputes over the scope of work that was delivered and whether it aligns with the project parameters and requirements. Business and management consultants can mitigate their exposure to such disputes by having clearly defined terms of engagement and by implementing more formalised engagement processes.
For example, regular milestone meetings will help ensure projects don’t stray from expected objectives. These meetings should include senior level executives and record progress towards stated delivery targets.
Another major exposure is irrecoverable fees – monitoring and recording progress to agreed benchmarks will help prevent instances of fees being withheld.
PI policies offer a broad base of cover and will help to meet costs in claims arising in the following areas:
All business and management consultancies should take time to identify and mitigate their exposures and assess the safeguards and services offered by insurance.
In particular, this includes consultancies in the following areas:
All PI claims are handled in-house by experts in our London, Bridgend and Bristol offices. Each claim is allocated to a dedicated and experienced claims underwriter, meaning direct access to a decision maker for brokers and insureds.
We also employ qualified lawyers to ensure we have the required expertise sitting within our teams, rather than having to outsource the work to third parties.
In addition to increasing the speed and efficiency of claims handling, our in-house expertise is also on hand to provide guidance on developing issues. This often prevents them escalating into claims. In part, the low frequency of claims is a result of the assistance given to insureds to enable them to respond to complaints effectively.
Tokio Marine HCC is a leading specialty insurance group with offices in the United States, the United Kingdom, Spain and Ireland, transacting business in approximately 180 countries and underwriting more than 100 classes of specialty insurance. Our products and capabilities set the standard for the industry, and many of our almost 3,000 employees are industry-leading experts. Each of our highly entrepreneurial businesses are equipped to underwrite special situations, companies and individuals, and acts autonomously to deliver effective solutions.
For more information about our Business and Management Consultants offerings click here.
