Risk Management: How Your Clients Could Protect Themselves Against PI Claims

Professional Indemnity (PI) is likely to be an essential consideration for many of your clients. While the protection it provides can give small business owners important peace of mind, most hope they never need to make a claim. Risk management practices could help your clients avoid needing to make a PI claim and help them save money come renewal time.

Here are three risk management strategies that could help protect your clients against PI claims:


Understand PI risks

The first step to preventing PI claims is understanding the risks that lead to them. Whether your SME client is a sole trader or employs a team of professionals, everyone at their business should be part of their risk management plan.

After a claim is made, insurers often want to know what steps are being taken to prevent similar claims in the future. According to our insurer partners, businesses often implement ongoing staff training, keep an updated complaint register, and create a review process to catch issues before they reach customers, among other things.

These steps and other preventative actions can be put in place from day one, helping your clients prevent PI claims altogether.


Respect professional expertise

As professionals themselves, your SME clients understand and appreciate the amount of education and hard work that goes into obtaining professional certifications. However, it’s easy for an off the cuff remark to be mistaken for advice or tempting for some clients to provide advice in an area of their industry that they’re not up to speed on.

Our insurer partners suggest that professionals stick to what they know to avoid unnecessary PI claims, “If a customer asks for information regarding a non-accounting, or even a different type of Accounting matter to what you specialise in, then recommend they consult a professional who works within that industry.”

While this recommendation is aimed at accountants, it’s good advice for clients in all industries and occupations.


Keep written notes

The projects your SME clients work on are not always straightforward. Changes may be made to deadlines, product specifications, or other parts of a project as it moves forward. If these changes are agreed upon verbally, it could cause trouble in the future if the customer decides they are no longer happy with your client’s work.

“Following a meeting with a customer, write a summary of what was discussed and make sure that your customer fully understands the advice they received. Request they sign a form to confirm their agreement,” say our insurer partners.

Keeping written notes can help your clients back up their work if a claim is ever made, but it could also help them avoid PI claims altogether. Putting all agreements or requests in writing can help your clients better understand what their customers want and help them avoid misunderstandings that could lead to PI claims.


Professional Indemnity for your SME clients

Following a risk management plan could help your SME clients prevent many Professional Indemnity claims and help them save money when it comes time to renew their policy.

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*The information in this article is general only and should not be relied upon as advice. BizCover for Brokers is a registered business name of BizCover Pty Ltd (ABN 68 127 707 975; AFSL 501769).