Why do actuaries need insurance?
As an actuary, you apply your skills and expertise to develop financial and statistical theories designed to solve real business problems and reduce risk for your clients.
Legal protection from accusations of professional errors and omissions
Actuaries predict the future, and their clients rely on the advice. An error in the prediction can lead to substantial financial losses.
Contractual obligations
Clients often seek assurance that their interests are protected when they engage the services of an actuary. Having indemnity insurance in place is often a contractual must.
Financial stability
Professional indemnity insurance safeguards actuaries' financial stability. In the event of a significant claim, the insurance ensures that actuaries can continue their business operations without jeopardising their personal assets.
Data loss
Actuaries handle a lot of sensitive information and data. Sharing this information inadvertently with the wrong party can lead to compensation legal claims.
Professional indemnity insurance for actuaries
Professional indemnity insurance is a critical component of risk management for actuaries. It helps protect both their professional integrity and their financial well-being, ensuring that they can continue to provide actuarial services with confidence.
Actuaries are entrusted with financial and statistical responsibilities, and errors or negligence in their work can lead to financial losses for their clients. If a client believes that they have suffered a financial loss due to an actuary’s professional misconduct, they may file a legal claim.
What does professional indemnity insurance for actuaries cover?
Claims, even nuisance ones, can be expensive and time consuming to defend and the costs can be substantial. Even if a claim is unsuccessful, the time and effort involved in contesting it involves diverting otherwise productive resources.
PI insurance for actuaries provides cover for various liabilities and risks that actuaries may face in the course of their professional services. The specific coverage can vary based on the insurance policy and provider.
Cover responds to client accusations of:
- Breach of your duties
- Acting negligently
- Failing your duty of care
- Making an error
For example, a client or a third party may accuse you of:
- Miscalculating the pricing of investments or products
- Making an error in predicting the claims experience and profitability of a book of business
Switching your professional indemnity insurance
You may occasionally wish to consider a better deal. If you decide to switch to a new insurer, remember that you can no longer make claims against the previous policy. Ensure your past work is covered with the new insurers under what is called “retroactive cover.”
Should I keep professional indemnity insurance if I take a break or retire from being an actuary?
It’s wise to keep your professional indemnity if you’re taking a break or retiring from providing actuarial services. Claims against professional misconduct can surface months or years after you delivered the work,
Remember: If you have cancelled your policy, your insurance will no longer work.
How long you keep your cover in place is up to you. Consider the type of work you did and the likelihood that a client might bring a claim against you.
Public liability insurance for actuaries
If part of your business activities is seeing your clients face to face, either at their premises or your office, you may benefit from having public liability insurance.
Public liability coverage safeguards your business from unforeseen incidents, such as accidentally spilling coffee on a client's expensive laptop or a client slipping on a wet floor. The expenses related to injury compensation and legal fees can rapidly escalate, potentially reaching thousands.
What does public liability insurance cover?
Public liability insurance addresses legal claims related to accidental injuries or property damage. In the context of an actuary’s workspace, the risk is typically low. However, it's prudent to contemplate this insurance if you engage in regular face-to-face interactions with clients and third parties during your daily activities.
Cover includes:
- accidental injury or death
- accidental property damage
For example:
Someone may claim compensation because during a business meeting with you:
- They suffered an injury and blame you for causing it.
- You failed to warn someone coming to your premises that the floor is wet and suffered a nasty fall.
Other insurance actuaries buy
As an actuary, the insurance coverage you need will depend on your specific circumstances. Can you afford to replace your computer equipment if it's lost, damaged, or stolen? Are you prepared to handle a legal dispute if one arises?
Commercial legal expenses insurance
Most commercial legal expenses insurance will protect actuaries against various tax and legal issues you may encounter due to your profession, which are not covered by professional indemnity or public liability.
At Suited, we combined £100,000 of commercial legal expenses insurance with helplines and other tools to better assist actuaries in dealing with these issues. We call this Business Legal Protect, and it’s part of your subscription.
Business Legal Protect offers qualified advice and assistance with:
- Legal and accountancy matters concerning your business
- Criminal prosecution
- Compliance & regulation issues
- Unpaid invoices (over £200)
For example:
- HMRC flags you for an IR35 investigation
- You need legal help chasing a major unpaid invoice
- You need guidance on compliance issues for your business
Electronic business equipment insurance
Actuary services are often computer-dependent, and the cost of equipment has gone up. If you have invested in an expensive laptop, you may like to protect it by having electronic business equipment insurance that would pay for the cost of damage or replacement.
