When it comes to professional indemnity (PI) insurance, the claims process is rarely smooth sailing. While some cases wrap up quickly, brokers know all too well that tricky claims, especially those that end up in court, can drag on for months or even years. For brokers on the front lines, every claim brings a unique set of challenges, from untangling complex documentation to managing client expectations. Understanding where the process can stall and how to keep it moving is crucial for brokers to deliver the best outcomes for clients.
According to brokers, when a PI claim grinds to a halt, it’s usually due to a handful of familiar culprits.
“Incomplete or missing documentation in the claims process is a problem,” said Schalk Van Der Merwe (pictured above left), CEO at Omnisure. There can also be disputes over policy interpretation and, he said, the sheer complexity of proving the causation of the claim itself.
“Another issue that we're having at the moment, which leads to delays, is late notifications or vague initial information,” said the Sydney-based CEO. The word “vague” sums up a core challenge for many brokers - not just in the information clients provide, but also in the policy wordings themselves.
Watch next: How should brokers approach professional risks?
"Vagueness in PI wordings can be particularly problematic, particularly for professionals,” said Genevieve Matthews (pictured above centre), client director with WTW.
She explained that these grey areas slow down the claims process and can also lead to disputes. Matthews recommends brokers advocate for profession-specific endorsements and work closely with underwriters to ensure clarity in a policy’s intent and definitions from the outset.
The biggest risk with ambiguous or unclear policy wordings is that it’s often the insured who bears the consequences, facing rejected claims or lower payouts.
"By and large, any ambiguity in policy wording will be found in favour of the insured,” said Nick Beswick (pictured above right), head of professional indemnity in Australia and New Zealand for Newline Australia Insurance. “Particularly if an insurer is seeking to rely on an exclusion and there's doubt around the language of that exclusion and how it should be interpreted.”
Beswick agrees with Matthews that these issues can be avoided if underwriters have a deep understanding of the risks and how policy wording should respond to claims. He urges brokers to scrutinise the track record and reputation of the agencies or insurers they work with.
An agency known for frequently changing its security should raise red flags. If the insurer backing a policy changes, it can be unclear who is responsible for handling and paying out claims. New insurers may interpret policy wordings differently or refuse to honour previous commitments, leading to disputes or denied claims. There’s also a risk that portfolios could be put into runoff, further complicating the process. “This can create delays and confusion around who's actually responsible for the claim,” said Beswick.
One of the most important roles a broker plays is ensuring clear, timely communication between all parties involved in a claim.
"We're playing that critical role in managing these relationships and ensuring that the communication is timely, transparent and that parties are aligned and across what's required,” said Matthews.
Still, even with the best preparation, delays can happen, especially in complex PI claims. Van Der Merwe said brokers are often in a tough spot, but swift action makes all the difference.
“If there is a problem, it's about communicating that problem and delivering that news very quickly,” he said. “That will usually help keep the client on your side."
Are you a broker working with professional indemnity insurance? What hurdles have you encountered and what changes would make your job easier? Please hare your experiences below.
