Interview with Rob Faulkner

Why is it essential for law firms to arrange appropriate insurance for their probate clients?

The Probate process can be a complex and unpredictable journey. While a law firm's expertise helps navigate the legalities, unforeseen issues can arise, exposing your firm and clients to financial risk.

A solid insurance proposition can protect your clients and provide peace of mind during stressful times. Insurance can also reduce the risk of negligence claims against your firm while improving your clients' confidence in the probate process and the long-term protection of their inheritance.

Consider that most lay executors have yet to learn of the potential extent of their liabilities and that these can last forever. Beneficiaries also face the risk of repaying all or some of their inheritance if there is a claim and no insurance policy to protect them.

If clients fully understand their risks, a comprehensive insurance solution can increase client confidence in the services the firm provides.  

Clearly articulating client risks and how insurance can protect them may also persuade more clients to choose a full estate administration solution over a basic grant of probate application service.  

Firms working with Insuristic benefit from a streamlined process for arranging probate insurance, including property, land, and legal indemnity coverage.  These competitively priced products often provide broader protection than clients can typically secure, saving them time and money.

What risks should law firms consider insuring against?

Law firms should consider the following risks for every client (Insuristic offers insurance solutions for each of these scenarios)

Unoccupied Property: Appropriate insurance needs to be implemented as soon as possible. Extending the deceased's existing insurance is usually not appropriate (more on that later). It is better to work with an unoccupied property insurance specialist, with cover, you know, to ensure the policy can be complied with and thus protect your firm and clients from the risk of uninsured losses.

Land: If the deceased owned land not contained within the property boundary, a duty of care exists to protect visitors (there lawfully or otherwise) from injury or damage to their property. This duty of care passes to the estate, so arranging a land insurance policy is essential to insure against the risk of public liability claims.

Occupied Property: It is common for dependents to remain in the property or for beneficiaries to move in. It can be challenging to arrange the right insurance policy when this happens. A home insurance policy won't be appropriate due to a lack of insurable interest. A Landlord's policy isn't typically suitable either, as there is unlikely to be a tenancy agreement in place, which is a condition of the policy. If you have instances like this, you should contact Insuristic, where we can assist offline.

Landlords Insurance: If the deceased owned investment property in their own name, this property will need to be insured in the name of the estate until the estate is distributed.  Insuristic can help with this offline.  You can get a quote by contacting us.

Unknown Creditors: Even if a liability search indicates there are no known issues, an unknown creditor can still make a claim against the estate after distribution. If a Section 27 Notice is in place, it will not protect the beneficiaries from claims. A Section 27 Insurance Policy does and, therefore, should always be offered.

Inheritance (Provision for Family and Dependants) Act 1975 (IHA) Claims: According to a recent article in Today's Wills and Probate, there was a record number of inheritance disputes last year, with specialist lawyers estimating approximately 10,000 cases annually.  

An Early Distribution Insurance policy should be a key consideration for all clients to protect against Inheritance Act Claims. It is suitable for most clients because it doesn't just cover estates requiring distribution during the 6-month waiting period. It covers any claim after the distribution of the estate that falls under the provisions of the IHA 1975.

Missing Wills: If a newer Will is discovered after the estate has been distributed, in the absence of insurance, it can result in a significant claim against the estate and the executors. If the claim is successful, the beneficiaries may have to repay some or all their inheritance.

These claims can occur even if a Will Search indicates no other Wills, as the current databases do not have full coverage. Missing Will Insurance should be discussed with every client, even those you believe to be intestate.

Missing Beneficiaries: Larger complex estates usually benefit from a genealogist's involvement. However, there is still the risk of an unknown beneficiary claiming against the estate after it has been distributed. The estate may also have a known beneficiary who cannot be contacted for some reason. In both examples, a Missing Beneficiary Insurance policy would protect against the risk of future claims.

What are the main risks to firms providing probate and estate administration services?

I would say the main risks to firms are related to preventing professional Indemnity insurance claims by offering the full range of insurance protection for their clients.

This can be challenging, as law firms are not insurance brokers. Sourcing multiple insurance quotations isn't always easy and can take up a lot of their time. Plus, the quotations they receive may differ, and some may not be suitable for the client's risks.

Lastly, how well do the insurance provider's claims teams perform? Large property claims can delay the distribution of the estate, and firms will need to negotiate a fair settlement, too.

Firms can reduce their risks by:

• Working with a probate insurance specialist that provides the right level of cover tailored for their probate clients.
• Ensuring insurance providers have a fair, reliable, and easy-to-navigate claims process.
• Considering each of the risks previously identified and discussing them with every client.
• Providing a quote for each of the relevant insurance policies for every client.
• Recording on file if the client didn't want to proceed with a policy.

If a firm works with Insuristic, they can rest assured that we only use 'A' Rated Insurance capacity with a first-class claims service.

Our property clients will benefit from an in-house claims service that can support them at every step, such as instructing loss adjusters, managing the claims process and negotiating a fair settlement with insurers.

If a property doesn't fit our insurance products (such as it's a high-value property, it is occupied, in a poor state of repair, or has non-standard construction), we can find alternative insurance quotations via our advisory team at SJL Insurance. I doubt there will be many properties for which we couldn't find a solution. The same service is available for your clients if we quote directly.

Are there any particular areas where you think solicitors risk being underinsured?

In addition to what I have said earlier, there are several areas where a law firm could be underinsured.

Here are some examples of common issues:

1. Failing to conduct the full range of estate and Will searches on every estate can make arranging complete insurance protection difficult.  
2. Suppose a firm relies on the property insurance arranged by the deceased to adequately protect unoccupied property. In that case, it can be risky for the firm, as the previous insurance policy will likely be unsuitable for unoccupied property. The insurer may impose a reduction in coverage and more stringent policy conditions. If the estate suffers an uninsured loss, the executors could be liable for the shortfall. If the law firm provides an estate administration service, this could also result in a professional indemnity insurance claim.
3. If a firm uses a block policy provided by another organisation, it could result in the property having no insurance. This is due to issues with insurable interest and restricted policy cover. I have written an article on this for Today’s Wills and Probate, called ‘Block Policies: The Risks for Law Firms and their PI.’
4. Most beneficiaries will want to receive their inheritance as early as possible. They could complain if firms make them wait until the expiry of the statutory period (or longer) to receive their inheritance.  Offering an Early Distribution Insurance policy to every client provides a choice and will eradicate that risk.
5. Not insuring against Inheritance Act Claims. As I have already mentioned, Early Distribution Insurance will protect against this.
6. If a firm only arranges a Section 27 Notice and there is a claim from an unknown creditor, this liability will pass to the beneficiaries. The result could be a professional indemnity claim for the law firm because they could have arranged Section 27 Insurance, which would have protected the beneficiaries.

How do you help firms to ensure they have the right insurance?

I'm a Chartered Insurance Broker with extensive product development experience during my 28-year career in the insurance market.  

During my career, I've worked for insurance companies, underwriting agencies, insurance brokers, and insurance technology businesses. 

I combine my technical knowledge with good product development practices to develop insurance products specifically designed for the probate market. 

These products are not off the shelf or available from any other insurance firm.

I have developed products that are designed specifically for law firms and products that can be purchased directly by lay executors or administrators.

I develop my products thoughtfully, recognising the purchaser's challenges and requirements. My objective is to design products that are easy to buy and understand, with policy conditions that are clear and easy to comply with.

As a result, our clients will have peace of mind that they have purchased the right insurance policy for their needs.

How do you work with CLSQ?

We work with CLSQ on most of their estate administration insurance products, including Section 27, Early Distribution, Missing Will and Missing Beneficiary Insurance.

We have developed two distinct customer journeys for occasional purchases:

1. An online application process to help direct lay executors and administrators arrange legal indemnity insurance.
2. A quote journey for complex enquiries, such as where a law firm suspects there may be a future issue that needs to be insured against, for example, a known beneficiary who cannot be contacted or the potential for an Inheritance Act Claim.

We also share product development ideas, which have culminated in CLSQ backing a market-first product we designed called Insuristic Estate Protect.  

This product is only available for the law firms that partner with Insuristic.

It facilitates the rapid arrangement of Missing Will, Missing Beneficiary, Early Distribution, and Section 27 Insurance for estates up to £3m with no known issues. 

Law firms can obtain quotations in seconds, and policies can be issued with one more button click.

As well as streamlining a firm's legal indemnity insurance processes:

• Premiums can be up to 50% less than we can achieve on the open market.
• If a Section 27 Insurance policy is arranged, the firm does not require a Section 27 notice to be placed. The insurance can also be cheaper than a Section 27 notice, and it offers added protection for beneficiaries.
• There is no requirement for genealogy reports for estates under £350,000 requiring Missing Beneficiary Insurance, just a verified family tree going back three generations.

Insuristic Estate Protect will transform how law firms arrange legal indemnity insurance for their clients.

Why have you chosen to partner with CLSQ?

There are several reasons why we chose to partner with CLSQ, such as

1. They have excellent Insurer Capacity. The products we use are underwritten by Great Lakes, a leading 'AA' Rated Global Insurer handling insurance premiums in excess of €6.2bn. Great Lakes is part of Munich Re, which handles over €59bn in insurance premiums a year.
2. We have developed an excellent relationship with CLSQ’s underwriting, business development and leadership teams.
3. Their in-house claims service will take over a claim from the point of notification, liaising directly with you and the insurer.
4. CLSQ is an underwriting-led business that will consider tricky risks with the right level of information. They have demonstrated this on many occasions.
5. Like Insuristic, they are keen to push the boundaries with new products and ways of working, demonstrated in their enthusiasm for supporting our Insuristic Estate Protect product.
6. Our relationship is not transactional; it is a true partnership in which we promote and support each other.

CLSQ are an excellent company to work with, which is why we have chosen to work exclusively with them.