New Zealand Law Society - PI Claims

PI Claims

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When you look at technology, the internet, fashion, business or pretty much anything, there has been an astounding amount of change over the past 50 years. The same cannot be said for professional indemnity insurance. I recently came across an enlightening book written by Peter Madge entitled Professional Indemnity Insurance, published in 1968. A couple of the most interesting extracts are outlined below with my comments for you to consider.

“The increase of professional indemnity claims comes at a time when many of the professions find themselves burdened with other problems… The speed and urgency at which most of today’s professional work has to be undertaken often leaves the practitioner with insufficient time to perform his duties properly, or as thoroughly as he [or she] would like.”

This continues to be one of the major causes of professional indemnity insurance claims in 2013. Many liability claims arise from administration errors and solicitors who take on too much work and then forget to complete other work can often find themselves on the end of a potential claim.

If the speed and urgency of 1968 could see what working life is like in 2013 it may very well reconsider these comments. The introduction of email and technology has in one way made us more productive but at the same time has imposed an expectation for fast and accurate responses.

“Often the principals of a business find themselves overworked, simply because they cannot attract suitably qualified staff to whom it is possible to delegate work without close supervision. Unqualified or inexperienced staff are always a potential source of danger to a practitioner with insufficient time to supervise them and, in practice account for many of the actual claims made.”

This continues to be an issue in 2013 as work is passed off to other members of staff and not supervised effectively. We often see conveyancing, for example, delegated to junior staff but as you are all aware approximately one third of professional indemnity claims are as a result of conveyancing.

We may be in the digital age of smartphones, which can do everything under the sun instantly, but when it comes to professional indemnity insurance we are still using the 1968 round dial model. Solicitors continue to make the same professional mistakes and are under the same constraints that they were almost 50 years ago.

[The quotes are from page v and vi of the book Professional Indemnity Insurance, by Peter Madge, Butterworths, London, 1968.]


Damian Schade is Managing Principal, Assistant Vice President and Solicitors Practice Leader at Marsh. Damian advises professional firms on all areas of risk management and liability insurance. damian.schade@marsh.com.

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