Insurance for consultants in Singapore
What a consulting business in Singapore must insure
Few covers are compulsory for a general consultancy. The law sets two kinds of requirement.
Regulated professions. Some professions must carry PI by law or regulation. Accounting LLPs registered with ACRA must hold PI at the highest of three amounts. These are S$1 million, S$500,000 per corporate practitioner, or 2.5 times last year's gross income, capped at S$50 million. Licensed financial advisers must maintain PI under the Financial Advisers Regulations. Insurance brokers registered by MAS must meet PI requirements under the Insurance (Intermediaries) Regulations.
Employees. Under the Work Injury Compensation Act 2019, an employer must insure non-manual employees earning S$2,600 a month or less. The salary test excludes overtime, bonus, annual wage supplement, incentives and allowances. Employees doing manual work must be insured at any salary. Other staff are optional to insure, but valid claims must still be paid. The WICA guide for office staff sets out where the line falls.
Management, strategy, HR, engineering, IT and marketing consultancies sit outside the regulated group. Their PI requirement comes from client contracts, not statute.
Covers most consulting businesses carry
| Cover | Why | Compulsory? |
|---|---|---|
| Professional indemnity | Client claims for negligent advice, errors or missed deliverables | Only for regulated professions; required by most client contracts |
| Work injury compensation | Statutory compensation for injured employees | Yes, for non-manual staff at S$2,600 or less and all manual staff |
| Cyber | Breach response, client data claims, email fraud | No |
| Directors and officers | Claims against directors for running the company | No; often requested by investors |
| Public liability | Injury or damage at client sites and the office | No; often required by clients and landlords |
| Office package | Contents, equipment, money | No |
| Group medical | Staff benefit | No |
PI is the cover clients ask for by name. Large clients' contracts usually state a minimum PI limit and require a certificate before work starts.
Risks specific to consulting
A consultant's product is advice or a deliverable. Claims arise when a client acts on it and loses money.
- Negligent advice. A market entry study overstates demand. The client invests and writes off the venture.
- Missed scope. A deliverable omits a requirement in the statement of work. The client pays another firm to complete it.
- Late delivery. A missed project milestone triggers penalties under the client's own contracts.
- Confidentiality breach. A consultant shares client information with the wrong party.
- Intellectual property. A report or tool reuses third-party material without a licence.
- Contractual liability. The firm signs an indemnity wider than its legal liability. PI excludes the excess.
Claims arrive late. The Limitation Act 1959 gives 6 years to sue in contract or tort from when the cause of action accrues. Latent damage extends it. PI is written claims-made, so the policy must be in force when the claim is made. The retroactive date guide explains why continuity matters.
What moves the premium
PI for consultants is priced on six factors.
- Annual fee income. The base the rate is applied to.
- Type of consulting. Engineering, financial and IT advice rate higher than HR or marketing advice. Errors in the first group cost clients more.
- Client mix. Work for listed companies, government agencies and overseas clients raises severity.
- Limit and excess. Higher limits cost more, though not in proportion. A higher excess lowers the premium.
- Contract terms. Firms that cap liability in their terms of engagement present a lower risk.
- Claims record. Past claims and notified circumstances raise the rate.
Territory also counts. Work for clients in the United States or Canada is often excluded or priced separately, because damages there run higher.
For WICA, the premium follows declared wages by job type. Office staff rate low.
For cyber, the premium follows revenue, the data held and the controls in place, such as multi-factor authentication and backups.
What the broker needs from you
A broker needs the following to obtain terms:
- Company details: structure, years trading, number of directors and staff.
- Annual fee income for the last year and the current estimate.
- A description of services, with the fee split between them.
- The largest 5 clients by fee, with their sector and country.
- Sample terms of engagement and any liability caps.
- Client contract insurance clauses, with the PI limits they require.
- Claims and circumstances for the last 5 years.
- The current PI policy, retroactive date, limit and excess.
- Data held on clients, and the security controls in place.
- Staff wages by job type for WICA.
The retroactive date of the current policy is the item most often missed. A new policy without it leaves past work uninsured.
Frequently asked questions
Do sole-proprietor consultants need WICA?
WICA covers employees. A sole proprietor is not their own employee, so the Act does not require cover for the owner. Any employees the business hires must be insured under the usual rules.
What PI limit do MNC procurement teams ask for?
The contract states it, usually in the insurance clause of the master services agreement. Limits vary by contract value and the client's risk policy. Check whether it is per claim or in the aggregate before buying.
Does PI cover work done before the policy started?
Only if the policy's retroactive date is earlier than the work. A policy with a retroactive date equal to its start date covers no past work. Carry the original retroactive date forward at each renewal and when switching insurer.
Is cyber needed if I hold client data only in email?
Email is a frequent route for invoice fraud and data leaks. Under the PDPA, a notifiable breach must be reported to the PDPC within 3 calendar days. A cyber policy pays the response costs and any resulting claims.
Sources
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.