Professional indemnity insurance has a branding problem. For years it has been bought as a box-ticking exercise – the policy attached to a contract because a client or counterparty insisted on it, rather than because the buyer believed they carried any real risk. According to Liam Greene (pictured), head of PI and specialty at First Underwriting in London, that assumption is exactly what makes PI dangerous to misunderstand.
"One of the main reasons people buy PI because they're told to, that they have a contract and the other person says if you want this work, you must tick this box and have PI cover, and they go away with the assumption that they don't have any risk, it's just ticking a box," he said.
If a counterparty is insisting on cover, Greene said, it's because it has already identified a potential liability, whether the insured business sees it or not.
"So although it's a grudge purchase, it's got to be the right policy that is there in the event that they're ever challenged," he said.
That gap between perception and reality is compounded by how much broader PI cover has become. Most policies are now written on a civil liability basis rather than a negligence-only basis – an area also explored in Insurance Business UK's recent report on rising professional indemnity costs for solicitors – meaning they can respond to breach of contract, IP disputes, confidentiality breaches and dishonest acts by employees that cause third-party loss, not just professional negligence claims.
"Most policies are now written on what we call civil liability basis," Greene said. "So for non-practitioners this means it's like an all-risks policy, whereas in the past it was only negligence claims that would be covered. Anything that's a civil liability arising from the business conduct is covered unless there's a specific exclusion."
Greene said the challenge is recognising that clients may genuinely feel low-risk while ensuring the policy still reflects why the counterparty required cover in the first place.
Artificial intelligence dominates conversations about emerging professional risks, but the more immediate issue isn't whether AI makes mistakes. It's whether businesses are being transparent about using it.
"If you think about our clients using the AI to deliver the advice or the service, what are the expectations of the people receiving that advice? Do they know that it's partly used by AI? Is that kind of clear and understood in the contracts? Are they still paying fee and rates for it?"
Greene believes disputes over AI disclosure could arise even where the advice itself proves accurate. The concern echoes wider industry debate of how insurers are assessing professional liability exposure as AI-generated outputs become more common – a theme also picked up in Insurance Business UK's coverage of when AI gets it wrong.
"That's not really happening yet," he said of AI disclosure. "So probably that will lead to sort of claims and disputes, and the PI market is going to play quite an important part in helping resolve those claims."
While AI may be the newest source of concern, one of the industry's oldest risks continues to generate claims. Businesses still underestimate the liabilities associated with subcontractors and freelancers, often assuming responsibility can simply be passed back to whoever carried out the work.
"The use of subcontractors and freelancers to deliver work. It's not a new thing, it's a very old long-standing problem," he said. "That feeling that because it's the work of a subcontractor or freelancer, the claims will just pass through or be easy to recover back when things go wrong – it's just so rarely the case."
Greene believes the biggest challenge won't be a single new exposure but the increasingly complex way professional indemnity is bought and sold, particularly for SMEs navigating an unpredictable market where some professions continue to face blanket exclusions.
"The part that we play, and the PI market needs to play, is the specialists being able to look beyond one factor and just look at the whole set of risks that SMEs face, and just not making it too rules-based," he said.
The challenge is no longer convincing businesses that they need professional indemnity. It's helping them understand what modern PI cover actually protects them against.
