Professional Indemnity Insurance
Professional indemnity, also called PI or liability insurance, is essential. It covers costs of negligence claims such as poor service, property damage, and client/public injury. It protects against physical, reputational, and legal risks encountered when running an agency.
Key Policies for New Agencies
- Professional indemnity
- Equipment
- Legal expenses
Recruitment Costs and Commissions
Agencies typically charge 15-20% of the first annual salary, and fees for hard-to-fill roles can be up to 30%. Agency recruiters earn commissions, not salaries, with successful ones making up to $200,000. Companies hire recruiters to access top talent, and the average US recruiter earns between $35,000 and $200,000.
Considerations for Insurance Coverage
- Public liability unlikely needed for home-based solo recruiters without employees.
- Professional indemnity is crucial to cover common talent acquisition risks.
The Cost of Open Roles and Recruitment
An employer loses money daily with open roles due to lost productivity. Turnover risk grows as employees take on vacant duties. Factors affecting recruitment costs include advertising and travel expenses for interviews. Costs can range from $4,683 per hire to $28,329 for executives. It is advisable to pay more upfront to close positions faster and focus on workforce quality instead of just cost reduction.