If you are a Management Consultant then you are a member of what is one of the fastest growing professions. But what is a Management Consultant exactly? There are many people who use this catch all term to describe the work that they do when buying Professional Indemnity Insurance (PII) however it is important to understand that just because you describe yourself as a management consultant that doesn't mean that you will automatically qualify for cover under a Management Consultants Professional Indemnity policy. And if Insurers don't agree that you are working as a Management Consultants then you may find that your Professional Indemnity Insurance policy won't cover you in the event of a claim.
The following people all have described themselves recently as "Management Consultants" when trying to buy professional indemnity cover - a lady who provides advice to management on the movement of their investment funds, a chap who advises managers about alarms and security devices (and installs them) and, my personal favourite, the lady who advises the management of one particular European army on their strategic nuclear missile programme. Let us be clear, in no way are any of these three professionals "Management Consultants". And, whilst a Management Consultants policy is very reasonably priced, it is not designed to cover the risks that these professions face.
Most Professional Indemnity Insurers offer a range of policy types to cover a variety of professions and it is important that you buy cover for the correct profession. Management Consultants are normally considered by insurers to be those professionals who provide strategic, organisational, purchasing, development advice to their clients. The cover can be extended to cover those consultants who provide Financial, Technical, Engineering & Industrial advice, however for consultants who provide this type of advice it might be more appropriate for a more specific policy such as an Accountants, IT, Engineers or even a Design and Construct policy to be used. The most suitable policy will depend on the depth and level of advice being provided as well as on the particular insurers policy cover.
Some insurers are comfortable to include within the definition of management consultant consultants who concentrate on specialist areas of advice such as Personnel or Human Resources consultants, however care needs to be taken with these professions as some policy wordings have exclusions in respect of the provision of legal advice.
Training consultants can in some cases be insured as Management Consultants, however this depends on the type of training being provided. As a general rule classroom based activities which do not involve any physical activities will be considered, however anything that involves active participation, team building away days or confidence building stunts such as fire walking are likely to be excluded by a basic policy which excludes claims for bodily injury or death.
Company Doctors deserve a special mention. As a rule those consultants who provide mentoring, coaching and careers advice will be covered by a Management Consultants policy, however the Business Turnaround or Merger and Acquisition specialist will need special consideration by insurers and may be more appropriately covered by an Accountants wording.
Interim Managers can be covered by a Management Consultants wording, however not all Interim Managers are considered to be the same by Professional Indemnity Insurers. The manager that goes into a firm to cover a head of department or to set up a new operation for a few months will be viewed very differently to an Interim who takes on a CEO or Caretaker Manager role. Interims who take on an FD role may well need to be covered by an Accountants wording rather than a Management Consultant policy. Insurers will be happier to insure the interim who is not responsible for financial decisions or the strategic direction of a company.
When buying Professional Indemnity or Professional Liability Insurance it is always best to take independent advice. PI Expert is happy to provide advice to Management Consultants, Business Advisors, Interim Managers, Business Doctors and all other professions on their Professional Indemnity Insurance requirements. Please feel free to give us a call on 01825 745 410 or online at www.piexpert.co.uk
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