The Unasked Question: Governing Professional Indemnity Disclosure Before the Broker Calls

Professional indemnity renewal is commonly managed as a buying exercise: the broker circulates the proposal form, partners sign, the board notes the premium, and the file is closed until next year. That routine misses the most demanding question on the form. It is not the turnover figure or the claims history. It is the request to identify circumstances which might give rise to a claim. Answering it well requires something UK firms often lack: a written, current and owned record of client matters that have wobbled.

The proposal form asks a governance question

At first reading, the question looks like an insurance formality. In practice it tests whether the firm has institutional memory. A circumstance may be known to a relationship partner, a fee-earner, a complaints handler or the finance team, but not to the person completing the form. The board may never see the matter unless it becomes a claim. The result is an answer assembled under time pressure from recollection, not from records.

Boards do not need to assess the legal merits of every client matter. They do need to satisfy themselves that a repeatable process exists: a register, a named owner, a decision log and a calendar point that falls before the broker's timetable. That is a governance control, not an underwriting judgement.

Keep a standing register of matters that have wobbled

Every firm should maintain a standing register during the year. It should capture matters where the client has challenged the firm's advice or service, where a deadline or scope issue has arisen, where an internal review has identified a problem, or where a fee dispute carries an allegation of poor work. It should also record matters where a partner has said, informally, that a file is 'difficult' or 'might come back'. Those phrases are early warning signals.

The register should be concise. For each matter, record the client, the nature of the concern, the date first noted, the person responsible for the relationship, the action taken, and whether the client has intimated a claim. It should be reviewed quarterly by the risk committee or equivalent, not left to the week before renewal. The register is not a list of every unhappy client. It is a record of matters where the facts could support an allegation of negligent advice, omission or breach of duty. That distinction matters.

Name the person who owns the notification decision

A register without an owner becomes a list. The board should identify a named notification owner — often the general counsel, chief operating officer or a senior risk partner — with clear authority to escalate a matter to the insurer. The owner should have a deputy and should not be the relationship partner for the same matter. Separation matters: the person closest to the client may be least willing to characterise a difficult conversation as a potential claim.

The owner should keep a decision log. For each matter referred, record the facts known, the advice taken, the decision reached and the date. If the decision is not to notify, record why. That log is valuable for two reasons. It shows the firm has considered the question, and it prevents a later renewal from being answered as if the matter had never been reviewed.

A short test for the notification conversation

Not every difficult conversation is a notifiable circumstance. But every difficult conversation should be assessed. A short test can help partners decide when to refer a matter to the notification owner. Answer yes or no to the following:

• Has the client alleged, or is there a realistic prospect that they will allege, that advice was wrong, late, incomplete or outside scope?
• Would a reasonable observer say the firm's work or conduct may have caused the client loss?
• Has the client asked to preserve documents, mentioned legal advice, or used the language of claim or negligence?
• Has an internal review, complaints process or fee dispute identified a problem that could support such an allegation?

A yes does not automatically mean notification. It means the matter goes to the named owner for assessment. That assessment should be recorded. The test is deliberately short because it must be usable by busy partners, not a legal treatise.

Build the file before the broker calls

The calendar rule is simple: build the file in October, not the week the broker calls. For a firm with an April renewal, October places the work six months ahead of the deadline. For a firm with an October renewal, April does the same. The exact month matters less than the principle: the file must be assembled before the renewal timetable compresses judgement.

The file should contain the register extract, the notification decision log, copies of relevant client correspondence, internal review notes, a summary of claims history and any insurer correspondence. It should list circumstances notified in previous years and their current status. It should identify open matters where a claim remains possible. The board or risk committee should minute that the process has been followed and that the owner has confirmed the position.

The broker meeting should then be about more than price. Ask the broker to review the disclosure methodology, not just the answers. A broker can advise on the wording of a notification and on market presentation. The firm, however, owns the decision. That distinction should be understood before the meeting, not discovered during it.

If the October point has passed, the correct response is not to wait for the broker's call. Start the file now, record why it was started late, and set the next internal date in the calendar. A late file is better than an empty one. An empty file is a governance failure waiting to be discovered.

The board's role after renewal

Renewal is not the end of the cycle. The register should continue, the owner should keep logging decisions, and the board should receive a short summary at each risk committee meeting. The question is not whether the firm can answer the proposal form on time. It is whether the firm can answer it accurately, with evidence, and with a clear record of how judgements were reached.

A firm that can produce a dated, owned and reviewed notification file is in a stronger position to buy cover on accurate terms and to demonstrate control. The proposal form is not an administrative hurdle. It is a test of whether the firm knows what it knows.