When things go wrong in practice: Five situations that can turn into professional indemnity insurance problems

Most accountancy practices don’t need reminding that professional indemnity insurance (PII) matters. What’s more useful is understanding how issues actually arise in practice - often from perfectly normal jobs that become messy due to timing, scope, documentation, or client expectations.

We’ve highlighted five situations we commonly see lead to PII notifications and claims across professional practices. By adopting a few small habits, you can reduce the risk of problems escalating and make them easier to manage if they do occur.

Situation 1: “It started as a quick favour” (scope drift)

A client asks for a “quick view” on something outside the original engagement - a short email answer, a steer on an HMRC point, an introduction to a contact, a comment on a draft agreement.

Why it's risky

The client may treat informal support as relied-upon advice and later claim loss if the outcome doesn’t go their way.

Practice-friendly risk controls

• Use clear wording that distinguishes general commentary vs advice.
• Keep engagement letters and scope statements current (especially when services evolve).
• When scope changes, confirm it explicitly: “Happy to help - this falls outside the agreed scope, so let’s confirm deliverables/timescales/fees and what we are/aren’t covering.”

Situation 2: The “difficult client” you keep too long (and then disengage)

A relationship becomes strained: delayed information, fee disputes, repeated boundary pushing, or a client who won’t follow advice.

Why it’s risky

Disengagement can trigger allegations, particularly if there are deadlines, filings, or handover disputes.

What good looks like

• Document key advice and client decisions as they’re made.
• Have a consistent disengagement approach (timing, wording, handover process).
• Keep a record of what’s outstanding at disengagement and what you are not responsible for after that point.

Situation 3: A complaint comes in… and you try to “fix it quietly”

Many complaints start informally: a frustrated email, a phone call, a threatened fee dispute. The instinct is to resolve it quickly, keep the relationship, and move on.

Why it’s risky

If a matter later becomes a claim, the timing and handling of notifications can be important.

Good habits to have

Have an internal decision path:

• What counts as a complaint vs a “circumstance”?
• Who decides whether to notify insurers?
• How are issues logged so nothing is lost?

This isn’t about overreacting - it’s about avoiding the situation where something escalates and you’re reconstructing events months later.

Situation 4: A cyber incident turns into professional liability

Cyber is not just an “IT problem”. A cyber event can become a professional issue quickly — delayed filings, compromised communications, client data concerns, or invoice/payment fraud.

Why it matters for practices

Client loss and client allegations can follow operational disruption, even when the root cause is technical.

Useful steps

• Ensure you know your incident process: who does what, who communicates, and when.
• Consider whether your risk controls match current realities (MFA, payment instruction verification, access controls).
• Treat cyber readiness as part of practice governance, not a once-a-year tick box.

Situation 5: Renewal arrives and you’re answering underwriter questions at speed

Even well-run firms can get caught here - particularly with staffing changes, busy seasons, or multiple partners involved.

Why it becomes risky

Rushed submissions lead to inconsistencies, missing context, and repeated follow-ups. In the worst case, misunderstandings can affect terms or delay completion.

• A better approach (without adding admin)
• Start a light review 8–10 weeks before renewal.
• Capture a simple “what changed this year” summary (services, client mix, staffing, processes).
• Identify any matters that might need to be discussed early rather than at the last minute.

A quick self-check: Six questions worth asking internally this month

1. Have we taken on new service lines, or are we advising more often outside the original scope?
2. Are engagement letters and scope wording actually being used consistently?
3. Do we have a clear approach to difficult clients and disengagement?
4. Do we know how we decide whether something is notifiable?
5. Do we have a robust process for payment instruction verification and email compromise risk?
6. If renewal was in 6 weeks, could we clearly summarise changes in the practice this year?

If any of these are “not sure”, that’s a good signal to do a short review now while it’s calm.

Support available to you as an ICAS member

Marsh Commercial is the appointed insurance broker for ICAS members’ PI insurance.

ICAS member firms can access a free PII insurance review to sense-check current arrangements and highlight practical questions to ask ahead of renewal - especially around areas that commonly cause issues in claims (scope, exclusions, excess mechanics, aggregation, and how your practice profile is presented).

Our PII includes enhanced benefits such as:

• Interest-free instalments
• Automatic six-year run-off provision and renewal process (subject to criteria)
• Tax, legal and wellbeing helplines
• Additional cover elements such as representation and public relations costs (subject to terms)

Who is Marsh Commercial and how you can get in touch

Marsh Commercial is a specialist UK insurance broker supporting businesses and professional firms. We are the appointed insurance broker for ICAS members’ PI and cyber insurance. We work with ICAS member practices to help reduce friction at renewal, sense-check cover suitability as firms change, and support you through the process when issues arise.

Call the Marsh Commercial ICAS team: 0330 175 5876

This blog is one of a series of articles from our commercial partners, Marsh Commercial. The views expressed are those of the author and not necessarily those of ICAS.