A Professional Indemnity claim is the second most common underlying cause for small to medium businesses going to the wall. This is usually because dealing with the claim takes up so much time that the proper running of the firm is neglected, even where the allegation is unfounded and the insurance only has to fund the defence.
When a claim does occur many firms feel that they receive little support from their brokers, or those administering the scheme through which they are insured. Fundamental to this situation is that the major insurance brokers do not make provision for the cost of servicing claims. Some years ago a major London market broker calculated that it cost his firm at least £100 every time that a claims file was presented to the market. Thus complex claim involving a number of meetings over a period of months or years is, to him, an uninviting prospect. It is of little comfort to the insured facing an allegation of negligence, or breach of a regulatory duty, to find that his broker is only going through the motions.
It is often reported that when a claim does occur the underwriters will do anything to avoid accepting liability and the broker does little to support the claim in order to maintain a good relationship with the underwriter. Sometimes this view is unjustified but all too often it is not. Typically arguments involve the following elements;
- Underwriters refusing to accept the notification
- Late notification of a claim or potential claim.
- Errors in the proposal form allowing the policy to be voided for non disclosure
A further complication is that many Insureds, unfamiliar with the way that claims are handled, will misinterpret the Insurers' actions as an attempt to avoid liability, when in fact no such decision had been made. This can become a "self fulfilling prophecy". We can assist in reassuring the Insured that the claim is being properly dealt with and try to prevent such misunderstandings damaging the Insured's relationship with the Broker or the Insurer.
Generally we can help when there is a dispute with the insurer or where the management of prior years' claims has become complex or time consuming.
We would:
- provide an assessment of the strengths and weaknesses of the insurer's position and suggest a way to resolve the matter,
- assist in the management of the claims,
- assist in the negotiation of disputed or contentious claims.