Every year, year after year you are required to fill out a new application. It is enough to make you scream. Accountants and Attorney Malpractice Insurance carriers generally want an updated application every year. Business Owners, Workers Compensation and Commercial Auto insurance carriers generally renew each year without an application. Why the difference between my Malpractice and general business insurance carriers?
The exposures for Business Owners, Workers Compensation & Commercial Auto do not change much from year to year. Exception to this is Workers Compensation, but an audit is performed annually to address any payroll changes, not an application. Unless a business buys or sells its buildings, cars or business personal property the exposures remain the same from year to year.
Malpractice Insurance exposures can change dramatically from year to year. If an accounting firm or law firm accepts a new client, that client may have needs in areas that the firm did not do work in the past. The firm may also have grievances or claims that may not have been reported to the company prior to the renewal application date. The underwriter may want an explanation as to what had caused the claim and what steps are being taken to prevent a future occurrence.
Accountants & attorneys may come and go with the firms. New professionals coming to the firm may bring different expertise. This may cause a firm to pursue clients and areas of practice that they had worked in. New professionals may also have had claims or grievances at prior firms that again may impact the desirability of the firm.
The changes in a firm’s makeup are addressed on the annual renewal application. The changes in the firm’s makeup can cause the premium to change or change the desirability of the firm to the insurance carrier. With the renewal application the malpractice underwriter can assess if the firm still meets the criteria for the carrier and what the renewal premium should be. It also gives the firm a formal structured method to document changes to the firm.