Professional indemnity claims rise by 6% in two years

Marsh India said PI claims range from $20m to $100m.

Professional Indemnity (PI) insurance claims recorded a notable increase from 2022 to 2023, with 36% of PI claims originating in the United States, 16% in the United Kingdom, 12% in India, and the remaining 36% from other countries, including Brazil, Belgium, Malaysia, and Spain, data from Marsh India revealed.

The total number of claims under PI policies handled by Marsh India rose by 6% over two years, attributed to increasingly complex solutions and services provided by companies in the communications, media, and technology (CMT) sectors.  

Claims frequently arose from breaches of contract, negligence in providing services, and failure to meet contractual targets. 

Cyber-related breaches have further compounded these risks, exposing companies to significant financial and reputational damage.  

Negligence in delivering professional services accounted for over 45% of all claims, making it the primary cause of financial losses. 

Other causes included delays or failures to perform services, breaches of professional duties, and non-adherence to contractual requirements. 

In the past two years, PI claims reported by Marsh India ranged from $20m to $100m.

In 2022, PI insurance prices saw an 11% YoY increase, with large companies facing marginal premium hikes of 12%-17%. 

In contrast, mid-sized and small firms experienced a 66% rise in deductible or retention amounts, driven by large claims in the CMT sector. 

Prices for blended PI and cyber insurance programs also increased by 15.65%, following a sharp 36.36% rise in 2021.  

The increase in high-value claims, particularly amongst India's tech companies, has prompted insurers to adopt conservative approaches, including higher deductibles and restricted coverage capacities.

Insurers are placing greater emphasis on policy disclosures, adherence to terms and conditions, and contractual interpretations when evaluating claims.  

Rising cyber incidents have added to the challenges, with businesses facing growing demands for damages due to breaches of duty of care and service interruptions. 

These developments highlight the critical need for robust PI and cyber insurance programs to manage emerging risks effectively.