LONDON, 18th NOVEMBER 2009 – 54 per cent of recruitment consultants and 36 per cent of personnel consultants are not covered for losses rising from professional mistakes or oversights, according to data from Coverzones, the business insurance comparison and policy management site, which has analysed a sample of 4,500 requests for insurance quotes between April and June this year.
Almost half of personnel and recruitment consultants not covered for the cost of everyday error
According to the 2009 Recruitment & Personnel Insurance Report, just 64 per cent of personnel consultants and 46 per cent of recruitment consultants have actively enquired about professional indemnity insurance for their businesses. This type of cover protects a business from claims arising from mistakes made during the course of regular business activities.
Simon Ball, CEO of Coverzones commented: “Many firms are putting themselves at considerable risk by failing to have professional indemnity cover. Mistakes do happen in the workplace and, even though most companies don’t enjoy dwelling on the thought, in some cases it can result in serious financial or reputational damage. Without cover, recruitment or personnel businesses are exposed to claims on issues such as breach of contract, loss or damage of client documents or outstanding fees. Imagine a scenario where you’d placed an employee who turned out not to have the skills or background that you thought they had or one where you had misplaced a confidential client file on the train – human error is a fact of life but, without cover, the cost of claims can be potentially crippling.”
While professional indemnity insurance is not a legal requirement, cover is recommended as best practice by industry trade bodies such as The REC (The Recruitment on Employment Confederation) and many clients will typically ask for a minimum level of cover to be in place as part of a contractual agreement.
Ball continued: “It is standard practice for clients to demand a certain level of indemnity cover from an agency. If an agency that was underinsured was wrongfully to sign a written agreement with a client that demanded a minimum cover level, the client could hold the agency liable. The agency would then be obliged to cover the difference between the level of insurance that they actually had and the damages awarded to the client out of their own pockets.”
90% of recruitment consultants not covered for accidents in the workplace
Coverzones data also revealed that just 10 per cent of recruitment consultants and 29 per cent of personnel consultants had actively enquired about public liability cover. This type of insurance protects against injury or damage to third parties and their property as well as any legal fees or expenses which may result from a claim.
Ball commented: “Recruitment is an industry where a large amount of work is conducted in client offices and where candidates frequently have to visit agencies. In the highly litigious age of personal injury claims, it is extremely wise to be protected from the unexpected. The industry has, of course, been hit by the recession but taking shortcuts with insurance cover is a false economy. Liability claims can hit a business hard and in some cases can cause lasting reputational damage.”
To view the 2009 Recruitment and Personnel Insurance Report in full please visit: http://www.coverzones.com/learn-more/news/Recruitment-Insurance-Report/