No Increase In Insurance Costs For Accountants, Expert Says

Tue, 11 Aug 2009

The record number of insolvencies in the UK has not led to a hike in the cost of accountants legal cover, according to one expert.

Troy Russell, a senior vice president at Marsh - the world’s leading insurance broker and risk adviser - said that business failures can often be a "red flag" for potential litigation as interested parties look to recoup losses they believe were caused by poor or inappropriate accountancy advice.

He added that if an accountancy firm is making more claims on its professional indemnity (PI) insurance, "it will inevitably face higher insurance costs at renewal".

But he explained that insurance premiums have remained level across the PI market due to the "influx of new players", with the costs actually reducing at renewal in some cases.

"This bucks the trend of other professions and financial institutions, where conditions are more challenging," said Russell.

Recent figures showed that nearly 6,900 businesses in England and Wales collapsed in the second quarter of 2009, an increase of 35 per cent compared to the same 3-month period last year.
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