Blanket notifications: sleep easy

By Mark Jenkyn-Jones
Download MFL Professional's technical bulletin 'Sleep easy with blanket notifications' by clicking on the image above

Mark Jenkyn-Jones, Partner at solicitor practice Robin Simon LLP, considers the extent to which professional indemnity insureds can validly notify circumstances in light of the line of authorities leading to the most recent case of McManus & Others v European Risk Insurance Company [2013] EWHC 18 (Ch).

“Claims made policies are now standard in the world of professional indemnity insurance (“PII”). They provide an indemnity against losses arising from claims made against them, as opposed to events occurring, during the policy period; i.e. the insurer on cover at the time the claim is made is on risk. It is also standard for cover to extend to losses arising from circumstances that may give rise to a claim, provided they have been notified to underwriters during the period of cover.

Usually claims or circumstances are notified individually as and when a problem arises with a particular file. But what happens when it is discovered that many claims may arise from the underlying problem and the insured seeks to make a blanket notification?

The nightmare uncovered

The claimants in McManus & Others v European Risk Insurance Company (“ERIC”) were partners in a firm of solicitors called McManus Seddon Runhams (“MSR”), a busy high street practice in Bradford. McManus Seddons has acquired Runhams is 2011 and Runhams itself had previously acquired Sekhon First in 2010. MSR was a successor practice to all these entities.

In November 2011, MSR received a single claim from a former lender client of Sekhon Firth.

They notified it to MSR’s professional indemnity insurers, European Risk Insurance Company (ERIC). Further claims followed in early 2012 that also related to Sekhon Firth files. By mid-May 2012, 17 claims had been directed to MSR as the successor practice…”

To read on, download ‘Sleep Easy with Blanket Notifications’, here.

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