Rise in Professional Indemnity (PI) insurance claims 'driven by recession' - PI for accountants

13/02/2009

A rise in the cost of Professional Indemnity (PI) insurance is set to take place over the course of this year.

Such is the assertion of an Accountancy Age article, which points out that clients are increasingly set to file litigation cases against their advisers as the effects of the financial crisis continue.

Victor Knope, partner at insurance broker First City and an adviser to the Institute of Chartered Accountants in England and Wales, said: "We're now in a recession and because of the higher threat of litigation in these times, clients turn on their accountants, questioning the advice they were given on deals."

He adds with insolvency rates rising, businesses will increasingly look to file a claim as they attempt to point the finger of blame.

Such comments were backed up by Jane Howard, of law firm Reynolds Porter Chamberlain, who points towards a "hardening" in the PI market as insurers become less willing to take on risk.

Reports of an increase in PI insurance claim cases were recently put forward by Nigel Brook, partner at law firm Clyde & Co, who suggested that any company that has witnessed a sharp decline in share prices has been prompted into taking legal action by their stock and bondholders "as a matter of course".

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