The claims process for professional indemnity (PI) insurance is rarely straightforward. While some claims may be resolved within weeks, brokers know that complex cases, especially when they escalate to court, can drag on for months or even years. For brokers, who are often at the heart of the process, understanding the main causes of delay and how to help clients navigate them is essential.
A key source of delay, according to many brokers, is the challenge insurers face in assessing the intangible elements of PI claims. Determining exactly how alleged poor advice has led to a specific financial loss is rarely clear-cut. As a result, insurers often spend significant time gathering detailed background information from clients before they can confidently consider indemnity under the policy.
At this early stage, brokers play a vital role. Since insurers are not required to engage with clients while collecting information, the broker frequently becomes the client’s main point of contact and source of updates. Proactive communication from brokers not only reassures clients but also helps manage expectations about the pace and complexity of the process.
Ambiguities in policy wording can further complicate and delay claims. One recurring issue is the treatment of fee refunds. Brokers warn that clients suing for negligence who are simply seeking a refund of their fees will likely find their PI policy does not respond. These policies, brokers emphasize, are designed to cover additional losses caused by a mistake – not just refunding the original fee. Insurers, for their part, usually stick closely to the exact words in the policy, so they won’t pay claims that are only about returning fees.
However, the situation changes if the client can demonstrate a broader financial loss. As one broker explained: “If there's a genuine unwillingness from the client to pay the fees because they say there's a much bigger issue at stake and that they have suffered a financial loss, the insurers will look at that claim because then there’s obviously more to the matter rather than just the client being disgruntled and not wanting to pay.”
Delays aren’t always about policy wording or evidence. Sometimes, communication breakdowns between brokers, clients, insurers and legal counsel can add unnecessary friction. “The broker can sometimes get left out of communications when legal counsel is appointed,” said one broker. Those communications often involve critical strategy decisions about how to defend or settle claims.
This exclusion can have real consequences. Clients may feel abandoned, concluding that their broker is no longer interested in helping defend their claim. “Which is not the case because the outcome of the claim is very much a time when a broker's value is measured,” said one broker. “It's up to the broker to ensure that when new legal counsel has been appointed, that they are included in all the communications between the legal counsel and the insurer.”
One area where some brokers see room for improvement is in the appointment of panel lawyers, those pre-approved by insurers to handle PI claims. “Issues often arise around agreement on the appointment of panel lawyers,” one broker said. Giving clients a choice from a selection of panel lawyers, rather than simply assigning them, could help them feel more in control of the process and more confident in the outcome.
Panel lawyers are a standard feature of PI policies, but involving clients in their selection is a simple step that can build trust and transparency at a critical moment.
Are you a broker in the PI space? Please tell us below about the challenges you face in the claims process and what you would like done to resolve them?
