Insurers make brokers’ ‘life hell’ when dealing with professional indemnity claims

Insurers’ “poor” service when dealing with professional indemnity (PI) claims is causing brokers to quit their jobs due to not being able to “cope with the impact” of lacklustre and untimely communication, according to Ross Dingwall, managing partner for Scotland and the north at broker Partners&.

PI insurance is designed to provide cover for professional individuals and businesses against claims for loss or damage made by their clients or third party partners as a result of negligent services or advice the insured person or company may have provided.

In the event of a PI claim being made, Dingwall stressed that - in his experience - even “simple things” like getting responses to emails and phone calls is “difficult” - this has been detrimental to brokers.

“We’ve got 400 staff - 300 of them are client and insurer facing and the hardest part of their job is dealing with insurers – it makes their life hell,” he said.

“Obviously, [this makes] the conversation with clients hard – that is a real challenge. We had somebody resign and leave [the] industry because they can’t cope with the impact of [the] lack of [insurer] service.”

Dingwall was speaking as part of a panel discussion hosted by insurer Markel, entitled How the professional indemnity (PI) industry is responding versus what is needed, which was held on 19 October 2022 and chaired by The Times’ technology business editor Katie Prescott.

He was joined by Markel UK’s broker development director, Richard Brooks, and Insurance Times editor Katie Scott.

Dingwall noted that another stressor for brokers is that “many insurance companies” have effectively “shut up shop” in terms of providing PI cover, which has left certain clients feeling “abandoned by some of the decisions that have been made”.

Speaking exclusively to Insurance Times, Richard Webb, director of MGA Manchester Underwriting Management (MUM) - which underwrites all classes of PI insurance and regularly deals with brokers through its in-house claims function - echoed Dingwall’s sentiments.

Webb said that in some markets, insurers are not “proactive” when it comes to handling claims. As a result, this “creates issues” because clients can get “angry” - in “worst case scenarios”, clients will even “point the finger and blame the broker”.

Furthermore, if claims are outsourced and brokers “fall out [of] the loop”, information can “fall between the cracks”, Webb added. This error is often only realised at the point of renewal.

However, Rachael Healey, partner at law firm RPC, believes that “the tensions” within the PI insurance market “are much the same as we always see” when it comes to broker and insurer relationships.

She continued: “Brokers or insureds often want [a claim to be paid] quickly if they consider that there is an issue to mitigate - [especially if] an insured [wants to maintain] an ongoing client relationship.

“[Whereas] insurers want to mitigate the risk and make sure that relevant defence arguments are deployed to reduce any claim payments.”

Resolutions

For Brooks, it is imperative for insurers to fix problems around their broker service – especially if PI claims are set to increase.

According to law firm Clyde and Co’s London market professional indemnity report July 2022, 80% of the 89 London market insurance practitioners polled in May 2022 expect PI claims to rise over the following 24 months, while 68% predict that the severity of claims will increase. Over half (53%) of insurer respondents added that their appetite for writing PI cover will increase too.

Brooks said: “We are not exempt from criticisms of our service. Because of the very ambitious growth plans we’ve had in the UK, to a certain extent we’ve been victims of our own success. We’ve doubled in size from 2020 [and] we’re on a growth trajectory to double in size again by 2025 - but to support that, we will recruit another 100 people by 2025.

“We’re [also] investing heavily in artificial intelligence enabled underwriting – devices that enable us to give [brokers] very quick yeses and nos rather than slow maybes.

“[But] let’s be perfectly straight about it - if we don’t deliver, we’re not going to grow. We’re going to suffer and we’re going to lose business. It’s in our interest to continue to improve.”

In terms of other potential solutions, Webb said that having an in-house, dedicated claims team that is focused on communicating with insurers can provide more insight for brokers.

Plus, mentoring initiatives can help pass on vital information and skills to industry newcomers - such as how to deal with an “awkward negotiation”.

Dingwall, meanwhile, said that the use of data and artificial intelligence to speed up automated decision-making is “really important” for improving broker and insurer communications, but the real key is “getting back to the basics and [understanding] that we are working as a partnership”.

He continued: “Sometimes insurers can be guilty of just hiding behind the broker. It’s easy to say ’no I won’t pick up the phone’, but if you’re a broker and you’ve got a client screaming at you, you’ve got to give them a response.

“If some of the insurers just answered the phone and responded, they would take a [quite significant] leap ahead of the pack.”