An engineering practice merger can bring together the historical Professional Indemnity exposures of two businesses.
Before combining the businesses, it is worth understanding:
- each firm’s previous engineering activities
- historical project values
- claims and circumstances
- retroactive dates
- previous insurers
- overseas work
- higher-risk disciplines
- outstanding projects
- contractual run-off obligations
The new business may need insurance covering future work while also recognising the historical work of both practices.
This can be particularly important where one firm has undertaken activities that the other firm’s insurer would not normally cover.
The insurance position should therefore form part of the merger review rather than being dealt with only after the businesses have combined.
Clear records of predecessor businesses and their previous insurance arrangements should also be retained.
