PI insurance on the road to recovery

22/04/2010

Written by Robert Bass

While the UK economy is now on the road to recovery, the tail end of a recession typically spells out a rise in professional negligence claims.

Such is the warning issued by Iain Winfield in an article for Accountancy Age, who explains this is because if a professional makes a mistake during a time of economic hardship, their client is likely to feel the effects "more keenly".

Once a recession is over, people are inclined to make their money back by any means available to them, he added.

Mr Winfield states that an audit of valuations that the valuer believes could be at risk of being "suspect" may be a worthwhile move as this could be invaluable in preparation for where a claim may be made.

In addition, an insurance provider could appreciate the efforts made to improve risk management as the valuer moves forwards in the event that a claim is made.

"Professional indemnity (PI) insurance policies require policyholders to report not just claims made against them, but also circumstances which could give rise to a claim against them," Mr Winfield explains.

In light of this, cover providers should be informed of any potential risks the audit brings to light, as failure to do this may mean the insurance itself is at risk.

Industry opinion site 24/7 Insurance Guide Blog recently reported that all categories of business operations are facing a greater number of claims, meaning PI insurance may never have been so important.

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