As we approach the traditional professional indemnity insurance (PII) renewal date of 1 October, many solicitors will be thinking about their insurance arrangements. Some may still be trying to find an insurer.
One thing everyone should bear in mind is the need to notify their current insurer of any outstanding claims before their policies expire. This is especially important for firms if your insurer is leaving the market at the end of September.
You must notify your insurer as soon as you become aware of a claim against your firm or circumstances that could lead to a claim.
While it is relatively easy to identify when someone is making a claim against your firm, we appreciate that identifying a circumstance is not always easy.
These could be initially a fee dispute or complaint, or you may discover that your firm’s work did not meet the standard required, or there may have been a loss of client funds.
Whatever the particulars, notifying your insurer about a circumstance does not necessarily mean that you will have to pay a higher premium or that you will become a less attractive risk, especially if they agree it is unlikely to develop into a claim. You should speak to your insurer if you are in any doubt, even if you do not feel there is any merit in the potential claim, or it is within your policy excess.
It is the basis on which claims are made that necessitates the requirement for notification. PII provides cover on a ‘claims made’ basis, which means that it is the policy in force at the time a firm first become aware of a claim that will respond, not the policy which was in force when the work was undertaken.
There are risks involved in late notification. A policy document will contain details of a firm’s notification requirements. We have seen many examples where the problem has been exacerbated by late notification, which then prejudiced the firm’s and insurer’s positions.
Everyone within your firm should feel confident that they can come forward with any concerns, and while you should have a process to check with your staff at regular intervals, the issue requires greater attention around your renewal period.
Remember you need to make sure that all claims and circumstances that your firm is aware of are notified before your policy expires. This is especially important if you are moving insurers this year, and the withdrawal of some participating insurers means that they will no longer be offering renewals.
You cannot be too careful here. You should check with everyone in your firm today, and check again a day before your renewal, to avoid any potential issues.
Gary Horswell, managing director of PII brokers Ntegrity Professional Insurance