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Why Recruitment Agencies need PI

Owning an agency or business in any profession that offers advice or a service can always lead to potential disagreements between you and the customer. Offering knowledge, skills, or information can leave you vulnerable to a compensation claim. And while your company as a whole may try their best efforts to offer seamless services to keep a customer happy, there is always a risk that a client may hold you liable for damages, professional negligence or accountable for financial losses. In today’s business world, the threat of an insurance claim is high. If I client believes you to be responsible they will act upon it right or wrong.

If your company is a recruitment agency there are high risks for making an error in judgment when offering a jobseeker to a potential employer. These errors can occur in various ways such as failing to assess a person’s suitability for the offered role, suggesting that there has been failure in assisting the employers search for candidates. By insuring yourself you protect yourself from any claims that might embarrass your company reputation. Yet it’s not only during a process, but actually after a completed briefing, that issues can arise. Things can still go wrong with a candidate placement that you have arranged, leading to financial loss. As a recruitment agency professional, there are many areas in your industry that you need to protect.

It is through Professional Indemnity, or PI, that a business can protect themselves against these legal claims. This type of insurance, along with Professional liability, can often be what saves a company’s reputation and removes the threat of bankruptcy. It covers the cost of defending your recruitment consultancy against any allegations against your professional service.

Despite the inherent usefulness of Professional Indemnity it still holds a negative stigma that it is an admission of bad practice or incompetence. Many avoid insuring their company for these reasons and end up regretting their choices later on down the line. While you should as a company hope not to experience a customer’s claims it is worth remembering that they are probable, and that Professional Indemnity is actually validation of your commitment to provide a professional insurance service to your client in the event of a legal issue.

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