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COVID-19: at the centre of the storm – the ‘perfect storm’



The Merriam-Webster dictionary defines a perfect storm as a critical or disastrous situation created by a powerful concurrence of factors.  To weather, the perfect storm demands preparation and immediate response, to ensure smooth sailing. 

In 2008, a container vessel departed from Le Havre to Algeciras, Spain in force 4 to 5 winds.  Overnight the weather deteriorated and the vessel’s speed was reduced.  By 1200 the wind had further increased to force 8 to 9 with rough seas.  At 1250 the bow thruster room bilge alarm sounded and several holes were found in the port side of the bow thruster room shell plating through which water was pouring.  The port anchor chain lashing was found to have released and the anchor had fallen, against the windlass brake tension, into the water.  As the vessel continued to pitch in the heavy seas, the anchor impacted against the hull, causing the damage.  It was later found that five adjacent compartments had also flooded.  Despite the forecasted poor weather conditions, no specific heavy weather checks had been carried out.  The incident reveals how important preparation is since a pre-warning on weather conditions is available. 

There is no reason why your Professional Indemnity (PI) insurance for Attorneys must be any different.  We have compiled a list aiming to provide a collective approach if you are renewing your firm’s PI insurance during the coronavirus pandemic. 

Firstly, an expert broker is still your best financial bet.  An expert’s broker role has multiple facets ranging from resource linker, knowledge conveyor and translator.  It is important to mediate between the production of knowledge and its application; define and interpret situations; and set priorities for action.  Marsh is one of these expert brokers, who rely on trust by their clients. 

Secondly, one size doesn’t fit all – at Marsh, we understand the shifting dynamics of a client’s demand for PI insurance.  In this mature industry, it has become clear that ignoring client preferences and past behaviours is not good for business while incorporating a more client-focused perspective most definitely is. 

Thirdly, advance preparation is the key to success.  Fewer clients still leave their PI insurance to the last few days (even on the last day) before expiry.  Meaningful collated information reveals information gaps, guides further collection and analysis, and provides a framework for submitting underwriting information to insurers. 

Fourthly, the dreaded proposal form.  Alas, the proposal form is still the most important and basic document for purchasing PI insurance and/or renewal.  Proposal forms serve, among other things, to elicit information.  They provide underwriters with the information they need to decide whether or not to accept the proposal and, if so, at what price and on what terms.  It is vital to disclose all material facts as this does not relieve you of the legal responsibility. 

Lastly, the ABC of renewal submission.  A detailed renewal submission will provide a more considerable outcome.  Ensure that your firm has policies and procedures in place to mitigate and manage the risk.  What the firm has done or is doing to avoid recurrence is useful during the engagement process with insurers. 

In the wake of COVID-19, we can expect challenging renewals.  At a time like this, a Business Continuity Plan is a must for firms of all sizes.  In all likelihood, insurers will be assessing how a firm will continue operating during a COVID-19 (or other) unplanned disruption in service more rigorously.  Nonetheless, we urge our clients to renew their PI insurance promptly.  Firms need to have their PI insurance in place to support their ability to meet liabilities as they fall due and to protect their clients.