What can go wrong?
In simple terms, actuaries are in the business of predicting the future – within reason – and that makes them vulnerable to claims when things don’t work out the way their clients expect.
The potential for professional indemnity claims depends on which field the actuary or actuarial firm works in but examples might include:
- Finance: miscalculating the pricing of investments or products
- Insurance: errors in predicting the claims experience and profitability of a book of business
- Enterprise management: errors in capital modelling
- Pensions: failure to advise on scheme structures correctly
Claims, even spurious ones, can be expensive and time consuming to defend and the losses can be substantial.
Any firm that is licensed by the Institute and Faculty of Actuaries as a designated professional body (DPB) or an approved professional firm (APF) is required to meet certain minimum cover requirements. Beyond that, individual actuaries and actuarial companies must ensure the limits and cover they buy reflect the breadth of activities and the potential financial impact of any breach of duty – bear in mind that insurers often provide cover on an aggregate basis rather than for each and every claim with no aggregate cap.
What are insurers looking for?
As with most professions, knowledge, experience and a good claims record are paramount but it is vital to provide a detailed description of activities – failure to do so could have financial repercussions in the event of a claim. Given that actuaries are themselves in the businesses of assessing risks, insurers expect them to be better than most at demonstrating how they manage it in their own practice.
PI for actuaries can be a difficult area to navigate and that’s where the team at MGB comes into its own. We know which markets will consider which types of activities and we’ll work closely with you to make the right impression with underwriters, first time round.