Professional Indemnity (PI) insurance claims 'rise due to economic downturn' - PI for financial services

11/02/2009

The numbers of Professional Indemnity (PI) insurance claims being filed are likely to increase in the coming weeks as the impact of the financial crisis continues.

Speaking to Insurance Times, a Lloyd's of London spokesperson stated that those banks and asset managers who provide guidance to retail and institutional investors may well find that a rising number of PI claims are filed against them.

And although it is the investigation of Bernard Madoff's businesses by the UK Serious Fraud Office and the US Securities and Exchange Commission that may be hitting the headlines, the publication points out that there has been an overall rise in business liability litigation as a direct result of the economic downturn.

"Any company that's seen a sharp drop in its share price has prompted legal action by stock and bond holders ... This seems to happen almost as a matter of course now," says Nigel Brook, a partner with the law firm Clyde & Co.

Meanwhile, Duncan Hall, senior researcher at broker and adviser FinnCap, adds that there could be a "dramatic increase" in PI insurance notifications as companies will look to sue those advisers who have given them guidance.

However, Richard Portlock, a partner at commercial and private client law firm Blake Lapthorn, recently claimed that the process of attributing blame on advice given during the current economic crisis may become more difficult as organisations have increasingly used advisers on a wider consultancy basis over the last 15 years.

PYV's Director of Claims, Robert Bass added: "Whenever investment values decline the advice which led to that investment being made will be looked at. Any professional who is unable to justify their advice will be vulnerable to claims. With this in mind, I consider it inevitable that more claims (justified or not) are in the offing."

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PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.

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