Claims-Made Professional Indemnity and a Change of Insurer

The answer turns on the wording of the ABC policy. A claims-made policy responds to a claim first made against the insured during the policy period, provided the professional services were rendered after the retroactive date. The mall was designed in 2017, after ABC's retroactive date of 1 April 2015, so ABC's retroactive date is satisfied. The claim was made in July 2024, after ABC's policy expired on 31 March 2023. If the ABC policy contains a circumstance-notification clause deeming a notified circumstance to be a claim first made at the date of notice, the 15 September 2022 notice is effective: it identified the mall, the cracks and the likelihood of a claim. ABC would then respond, and XYZ would not, because XYZ's retroactive date of 1 April 2021 excludes the 2017 design. If the ABC policy has no such clause, ABC has no liability because the claim was made after expiry, and XYZ has no liability because the design predates its retroactive date. The prior notice to ABC does not bind XYZ. The result is a coverage gap unless an extended reporting period or a continuous-cover clause applies.

Without a circumstance-notification clause, the September 2022 letter is merely information; it does not convert the 2024 claim into a 2022 claim. ABC's policy expired on 31 March 2023, so the claim first made in July 2024 falls outside its period. XYZ's policy is in force, but its retroactive date of 1 April 2021 excludes liability for professional services performed in 2017. XYZ is therefore not liable, even though the claim was first made during its policy period, because a claims-made policy requires both the claim to be made in the period and the act to be after the retroactive date. The insured has a gap. The only routes to cover would be an extended reporting period purchased from ABC, a continuous-cover or prior-acts clause in the XYZ policy, or a negotiated retroactive date of 2015 or earlier with XYZ. The broker should have addressed this at the March 2023 renewal.

The broker should have treated the September 2022 notice as a red flag. At the March 2023 renewal, the broker should have disclosed the mall claim and the notice to XYZ, requested a retroactive date of 1 April 2015 or earlier, and obtained written confirmation that XYZ would accept the prior acts and the notified circumstance. If XYZ refused, the broker should have explored an extended reporting period from ABC, a run-off cover, or a renewal with ABC to preserve the claims-made chain. The broker should also have checked whether ABC's policy had a circumstance-notification clause and whether the notice was acknowledged in writing. The client should have been warned in writing that a change of insurer with a later retroactive date would leave the 2017 design uninsured. These steps would have either preserved cover or given the client an informed choice. The failure to do so may expose the broker to a professional indemnity claim.