Claim: How it effects my renewal premium?

A claim can have an effect on your firm’s renewal premium, but it does depend on the claim and situation around the claim.

If your firm has a claim, the claims expenses and settlement amount are the amounts that insurance companies will refer to when determining your renewal premium.  They will look at the total payout on the claim or claims and compare that to the total premium that your firm has paid to the insurance company. This is called a loss ratio.  The loss ratio helps to determine your firm’s renewal premium with the insurance company.  If there was not a settlement amount and only expenses paid out, this is still considered in the loss ratio, but tends to be a lesser amount than if a settlement is paid out.  The bottom line is a claim can influence the premium, but it will all depend on the total loss ratio.

If there is a claim that is opened, and nothing further transpires with the claim then this will not likely influence the premium.  But again, the insurance companies look at the total claims history report to determine a premium amount.

Some insurance companies, when a claim is received, will put a reserved dollar amount on the claim.  This is the amount they anticipate that the claim may pay out.  This can influence the premium, but it will depend on the amount and the insurance company reviewing the claims history report.

Pre-claims will not influence your firm’s premium.  The pre-claims are there to help your firm out before it turns into a claim.  However, if the pre-claim develops into a claim, this can have an effect on the premium.

If you have any questions about how a claim may effect your firm’s professional liability premium, please call or email your Professional Underwriters agent for assistance.