Have you notified a claim?

How precise do you need to be when notifying your professional indemnity insurers of a possible claim?

This was the issue considered by Deputy Judge Rose in McManus v European Risk Insurance Co [2013] EWHC 18 in the context of a solicitors professional indemnity insurance policy.  The Claimant firm of solicitors had acquired the business of other solicitors' firms in June 2011.  Between November 2011 and May 2012 a number of claims were made to the Claimant in respect of conveyancing transactions undertaken by the previous firms, all of which were notified to the Defendant insurer.

Concerned at the number of claims, and the potential for more claims, in September 2012 the Claimant arranged for a third party to review 110 files from the previous firms, which review concluded that there was a real risk that further claims might be made as most of these files were conducted in the same way as those which were the subject of claims.  Therefore, on 21 September 2012 the Claimant sent a letter to the Defendant headed "Blanket notification of circumstances which may give rise to claims".  This notification letter referred to the existing claims, the recent disciplinary history of one of the previous firms, the findings of the third party investigation, and said that there was a risk that a claim might arise in respect of all the files of the previous firms (approximately 5,000).  The Claimant purported to notify the Defendant of circumstances which might give rise to a claim in respect of all 5,000 files even though no actual claim had been made. 

On 27 September 2012 the Defendant rejected the blanket notification as the Claimant had not identified "the specific incident, occurrence, fact, matter, act or omission which would give rise to a claim on each individual file".  The Claimant was unable to secure insurance on the open market on renewal on 1 October 2012, and blamed the Defendant.

The Claimant sued the Defendant for a declaration that the blanket notification was valid.  Following the decision in J Rothschild Assurance plc v Collyear [1998] CLC 1697, Deputy Judge Rose held that it was not necessary for the notification to be as prescriptive as that contended for by the Defendant insurer.  Provided circumstances exist which may give rise to a claim, and provided that those circumstances are notified, then any future claim arising out of those circumstances must be dealt with by the insurer duly notified.  However, Deputy Judge Rose declined to give any further declaration as to the precise scope of the Claimant's notification.  Such crystal ball gazing was deemed inappropriate as it would be either too narrow or too broad.  The precise scope of the blanket notification is an issue to be determined as and when it arises in the context of an actual claim.