To notify or not to notify: Key considerations for Professionals
11/06/2025
Clare Munro in our Specialty Lines claims team looks at the key considerations for organisations regarding their notification obligations under a claims-made professional indemnity policy and the duty of fair presentation of risk.
We have previously looked at how organisational values and behaviours impact risk culture. In case you missed it, you can read more about it here.
Recent global events have shown that resilience is vital for organisations to survive and thrive during turbulent times. The ability of the organisation’s people, culture and structure to handle sudden disruptions effectively is critical for success. Most organisations will have an enterprise risk management process (ERM) in place. This helps to:
- Identify risks;
- Assess the likelihood of risks occurring;
- Decide how to handle risks - 'tolerate, treat, terminate or transfer them'.
While some level of risk is unavoidable, insurance can help. But to get the most out of your insurance programme, it's important for everyone in the organisation to understand the insurance product and their responsibilities. A positive culture where employees are encouraged to speak up also plays a big role.
What is ‘claims-made’?
Professional indemnity cover works on a claims-made basis. This means that the claim must be made against the Insured in the policy year. Whether a claim has been made will normally depend on whether someone within the organisation is aware of a claim being made. The policy will usually specify who that person is.
It could be a specific person, like the Responsible Officer, or it could include anyone involved in the delivery of professional services within the organisation.
Understanding who needs to know about the claim is crucial. This determines whether a claim has been made and whether the notification obligations under a policy are triggered. An organisation must, therefore, be clear whose knowledge will be regarded as knowledge for the purpose of a claim being made and notified to insurers.
When should you notify?
The case of Archer v R ‘n’ F (t/a Biplob Restaurant) [2025] EWHC 1342 (KB), provides a key lesson on notification timing.
In this case, Miss Archer became ill after eating at the defendant's restaurant. She told the restaurant about her illness in November 2019 and a month later, her solicitor sent a Claim Notification Form (CNF) asking for the restaurant's insurer details. The restaurant did not respond to the CNF or other communications.
In October 2020, a letter of claim was sent to the restaurant. The CNF but not the letter of claim was sent to the insurer's claims handlers in November 2020 - the first time the claim was notified under the restaurant's insurance policy. However, the restaurant did not engage with its insurers until October 2022, when proceedings were served. The restaurant's insurers refused to provide cover.
The insurance policy required notification “as soon as reasonably possible”. In this case, there had been a delay of between 12 months or 18 days in notifying such circumstance. The court found that even an 18-day delay was too long.
The judge said: "In an era of telephone and email communication, none of those time periods equates to action taken as soon as reasonably possible”.
The restaurant's failure to notify the insurer promptly, combined with its lack of engagement, led the insurer to decline cover. The Judge noted that ignoring the claim increased the risk of an adverse liability finding and made it harder to investigate. Delays also increased the risk of higher costs.
What can we learn from this example?
Early disclosure of a problem means that insurers can support the organisation in deciding whether the issue is a notifiable circumstance and if it is, whether any steps can be taken to mitigate, or avoid a claim or any potential regulatory breach.
By being proactive and clear about your responsibilities, you can help ensure your insurance works for you when you need it most.
What should you notify?
When you're letting us know about a situation that may lead to a claim, there are some important things to keep in mind.
In the case of Kajima UK Engineering Ltd v The Underwriter Insurance Company Ltd [2008] EWHC 83 (TCC), the court said:
- “It is only circumstances of which the Insured is actually aware which can be the subject matter of a notification…The claim which is later pursued must arise not only from the notified circumstances but also only from the circumstances of which the Insured was aware”, and
- “There must be some causal, as opposed to some coincidental, link between the notified circumstances and the later claim.”
This means you cannot notify us about something you do not know about at the time.
That said, the threshold for notification is often low and might only require the possibility of claims in the future. If there is a real chance that something could lead to a claim in the future, you should let us know.
If the situation changes over time or there's a long delay between your notification and a claim being made, insurers will need to check that the claim is still directly linked to the circumstances you told us about.
We know it can be frustrating if it takes time to investigate your cover. To help things go smoothly, we recommend you provide clear notifications from the start. This includes:
- Who the claimant is
- What work your organisation does
- Any potential liability issues
- An idea of the possible costs involved
This will make things easier for all parties - for the insurer, for the organisation, and for any other insurers who may get involved later.
What is the duty of fair presentation?
The Insurance Act 2015 introduced a new 'duty of fair presentation'. This applies when you first take out a policy and whenever you make changes to it.
The Act requires you to:
- Tell us about every important detail you know or should know. If you're not sure, give us enough information so we can ask the right questions.
- Present the information in a way that's clear and easy to understand.
- Be honest and accurate. If you're stating facts, they should be correct. If you're sharing opinions or expectations, they should be made in good faith.
The duty applies to what your organisation's senior management knows, as well as the people responsible for arranging the insurance. It is important that they understand what's required of them and what they need to share during the process.
If you do not meet the duty of fair presentation, there can be serious consequences.
For example, in the case of Berkshire Assets (West London) Limited v AXA Insurance UK Plc [2021] EWHC 2689 (Comm), the court decided that criminal charges were an important detail that should have been disclosed when the policy was renewed. Because they were not, the insurer was entitled to decline cover.
If it is found that your organisation deliberately or recklessly did not meet its duties, the insurer can treat the policy as if it never existed. That means the organisation may be left uninsured, with the premium retained.
Avoiding pitfalls
A strong risk culture in your organisation can help promote a proactive approach to risk management. Encourage your employees at all levels to talk openly about potential risks and take responsibility for managing them.
If employees feel safe to speak up and have open, honest conversations, it strengthens the risk management process. It also means those responsible for insurance in the organisation will know early on if something isn't right. This allows conversations with insurers to start sooner, ensuring your insurance policy stays valid and provides cover when you need it most.
Conclusion
Insurance is a powerful way to manage risk. But to avoid problems later down the line, it’s important to understand your policy and talk to your insurer early. This helps protect your business from financial and reputational risks.
If you’d like to discuss this in more detail, please get in touch with our Specialty Claims Team.
