On this blog, we are dedicated to writing risk management and insurance advice for law firm Managing Partners. We teach you how to become better buyers and get the most out of your insurance programs. I feel that it is important to deviate from our normal method to call out an underhanded business practice that we still see rearing its ugly head.
Professional Liability Insurance for your firm is an important business necessity to protect you and your firm’s assets. It is typically an expensive product to buy and therefore frequently firms elect to finance the cost of the policy.
This is where the robbery may be happening. The actual financing of policies are usually facilitated by your broker through a reputable financing company that specializes in premium financing. Some brokers are guilty of charging an interest rate that is far above what is available in the premium financing market.
We have seen rates that exceed 12%. With our current low interest environment, this is simply unacceptable. Some Brokers are collecting as much as their commission in additional finance charges! Aside from a nominal administrative fee, your broker should be passing along the lowest rates available. The best practice is for your broker to use multiple financing companies to ensure the lowest possible costs for their clients. In this past year, our clients have enjoyed rates between 3-5% reflecting the true low interest rate environment of today.
It is very important for you to take a few moments and read your finance agreement to see what the charges are going to be. Too often, partners take the easiest path at that final sign off on the paperwork thinking that they already know the premium for the insurance and are prepared to make monthly payments. At the end of the process, spend five more minutes to make sure that you are not falling for this abuse.
