NEWS / Affiliate / Have you disclosed your "new normal" to your insurers?

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03 SEP 2020

HAVE YOU DISCLOSED YOUR "NEW NORMAL" TO YOUR INSURERS?

Brunel Professions flag the need to update insurers with your post-pandemic situation

The disruption caused by anti-Coronavirus measures has created challenges for professionals, and forced firms to adapt their normal ways of working and delivering their services.

For some firms, the global pandemic has not just represented disruption and uncertainty, but has created new business opportunities.

Now that we are in the aftermath of the initial UK national lockdown, and firms are considering what their “new normal” looks like, it is important to take a moment to consider professional indemnity (PI) insurance.

Practitioners should consider whether there have been permanent changes to their businesses. If adaptions which were originally necessitated by the anti-Coronavirus are becoming entrenched, then it should be considered whether disclosure to their insurers needs to be updated.

This includes new business opportunities which may have arisen. If there are new types of project or new lines of services which are currently being provided, have these been disclosed to the PI insurers? It is important that the professional business description in the practitioner’s policy is sufficiently accurate that it encompasses all of the firm’s activities. It is sometimes the case that if a firm has not kept the insurer up to date with what it is doing, then an outdated business description can actually operate as a form of exclusion.

Disclosure was discussed in a previous article published by ACE, and can be viewed here.

Firms are currently having to find new ways of working, and that will include more collaborative working for some in trying to overcome restrictions or capacity issues. Have any new joint ventures been disclosed to the insurers? Some PI policies contain strict conditions regarding disclosure of joint ventures, and only those disclosed are covered.

The same goes for sub-contracting work to others, and ensuring that this is approached in the right way. If informal arrangements were put in place during lockdown, and where getting the paperwork in order was difficult at the time, firms should now make the effort to backtrack over these and make sure that the detail is in order.

Good practice from the PI point of view in terms of sub-contracting was discussed in a previous article published by ACE, and can be viewed here.

There is a general feeling that more staff will be working from home in future and using personal IT equipment in parallel to the firm’s IT. An immediate concern from the PI perspective is ensuring that all relevant data and communications are captured for the professional’s file. This is because the firm’s file is essential for successfully defending a liability claim made against it.

There are already potential issues around the use of electronic devices, with data being held outside of the devices identified and considered by the firm, or advice being given outside of obvious working hours or communication channels. These issues are increased by further use of staff’s own IT, and firms should be thinking about these issues now so that they can establish their own working protocols. The earlier that these are established and communicated to staff, the better able the firm is to control practice in these areas.

In the event of protracted litigation, a firm may have to deal with formal disclosure to the claimant of all relevant information held. This already represents a substantial task for the defendant, and they face legal sanction if their disclosure is incomplete or flawed. Such litigation can arise many years after the work was performed, so firms will not want to add to their disclosure burdens by not being clear how their staff were working many years before, and therefore not being confident that all relevant data stores or communication channels have been adequately reviewed.

It is important to consider issues like these to protect the indemnity provided to the firm by the PI policy, and which in the present hard market, the firm has spent significant sums in arranging. 

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James  Burgoyne

James Burgoyne

Director - Claims & Technical

James joined Brunel in 2009 and heads up the Technical and Claims Department. As well as representing Brunel on the ACE PII panel, he writes occasional pieces for us on insurance, risk and associated topics.

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