• A reputation for professional excellence with integrity

    A reputation for professional excellence with integrity

  • Accurate understanding and technical analysis

    Accurate understanding and technical analysis

  • National and International Experience

    National and International Experience

  • 34 years in private legal practice

    34 years in private legal practice

  • A focus on events and consequences, not gossip

    A focus on events and consequences, not gossip

  • Helping lawyers, brokers, accountants, surveyors and other professions

    Helping lawyers, brokers, accountants, surveyors and other professions

  • There when you need him

    There when you need him

Telling Tales - September 2017

22 Sep 17

If in Doubt, Notify..!

The end of September is peak season for renewals of professional indemnity insurance, especially for lawyers, whose compulsory insurance schemes have traditionally used annual policies commencing 1st October. It’s vital to share information, directly with Insurers or through brokers, about any claims or ‘Circumstances likely to give rise to a claim’, with both the underwriting and sales staff of next year’s cover, and with the claims section of current-year insurers. This is not only because it’s a statutory requirement under the Insurance Act 2015, and affects the prospective insurers’ decision whether to accept the risk and how much premium to charge. It also draws focus on the need to ensure that the circumstances should be/have been Notified to current year insurers before the start of the new policy, because a failure to do so may lead to a downstream coverage problem with the future insurer.

This is often occasion for uncertainty as to whether such situations are in fact insurable risks; and whether they are ‘likely’ to give rise to a claim exposure. The key elements of a ‘Circumstance’ are one or more of the following:

  • An accrued, prospective or at least foreseeable loss, however small or large, to a third party…
  • from which the policyholder had, or may have had, a professional duty to keep the third party protected.
  • The loss may be a clear-cut financial detriment, such as an asset or monetary sum whose cash value can be measured clinically; but …
  • more often it is a legal right, commercial opportunity or gain, or avoidance of an exposure, and/or the costs of curing, reducing or preventing it.  

Sometimes there will be doubts – eg whether the third-party’s exposure or their loss item will be an insurable one, falling within the ambit of risks transferred to the insurer by the policy contract; or in fact attributable to the firm’s [in]actions; or within the scope of its protective duties. But it’s rarely worthwhile to gamble on these uncertainties. However small the prospect of an ultimate liability may be, if the Circumstances exist, they should be notified.

That said, the skill with which the notification is made can often carry real benefits, for both insurer and policyholder, to reduce risks of unnecessary alarm or inflated insurance prices. Consultations with brokers, or better still someone like me, can be very advantageous.

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Professional Risk Expertise

Mike Willis has worked with a diverse range of professions including...

The FMWL Approach …

  • Accurate understanding and technical analysis;
  • Focus on duty, causal event(s) and consequences; not gossip…
  • Sensitive but objective empathy;
  • Overarching commerciality; and
  • Clear aims, with vision where necessary to explore indirect routes to solutions.