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Professional indemnity policies written on a claims-made-and-notified basis contain a deeming clause. If the insured notifies a circumstance during the policy year that later gives rise to a claim, that claim is deemed to have been made during the year of notification. The mechanism only works if the notification is capable of being understood as a notification. A vague, sweeping statement made at year end will not do the job.
The reason the distinction bites so hard is structural. A claims-made policy responds to claims first made, or circumstances first notified, within the period of insurance. It does not respond to the work that caused the claim. So the question of which policy year a matter attaches to is not a technicality – it decides which insurer, which limit of indemnity, and which excess apply, and whether the matter falls inside or outside cover at all. A notification that is too broad to engage the deeming clause leaves the insured exposed in the gap between two years of cover, holding a loss that both insurers can plausibly decline.
Two English decisions set the framework. In Kajima UK Engineering Ltd v The Underwriter Insurance Co Ltd [2008] EWHC 83 (TCC), the court held that a broad notification referring in general terms to defects across a project was not sufficient to engage the deeming clause for later, specific claims. In HLB Kidsons v Lloyd's Underwriters [2008] EWCA Civ 1206, the Court of Appeal restated the specificity requirement – a notification must convey enough information for the insurer to understand what is being notified and to reserve against it.
It helps to read the two limbs of the insuring clause side by side. The first limb responds to a claim made against the insured during the period. The second, the deeming limb, responds where the insured becomes aware of a circumstance that may give rise to a claim and notifies the insurer of it during the period. The wording that follows the second limb is where the specificity requirement lives: most PI wordings ask the insured to notify circumstances that "may" or "are likely to" give rise to a claim, and many require notification "as soon as practicable" after the insured becomes aware. Those two phrases – the trigger for awareness and the promptness of the notice – are frequently litigated, and both Kajima and Kidsons turn on how they are read.
The practical point for a professional firm is that the policy does not reward volume. It rewards a notice that an underwriter can actually act on: open a file, set a reserve, and recognise the matter if a claim arrives a year later. A blanket year-end letter fails not because it says too little in total, but because it says nothing an underwriter can attach to a specific exposure.
Drawing the two decisions together, a circumstance notification generally needs to identify:
None of those points requires certainty. The insured is not being asked to prove the claim. The insured is being asked to describe the matter with enough particularity that an underwriter reading the notification would recognise it if a claim later landed on the desk. A blanket reference to "a number of matters that could conceivably become claims" does not clear that bar.
A useful way to test a draft notice is to ask whether a third party – a claims handler at the insurer who has never seen the file – could read it and understand which engagement is at risk and why. If the answer is no, the notice is doing the work of a diary note, not a notification. The five headings above are not a statutory checklist; they are the practical minimum an underwriter needs to open a reserve, and a notice that supplies them is far more likely to survive the argument that arises years later when a claim finally crystallises.
Firms with mature risk registers know how uncomfortable the middle ground can be. Over-notify – send everything, just in case – and the next renewal insurer sees a wall of orange flags on the proposal form, which affects both premium and appetite. Under-notify, and a matter that quietly ripens into a claim next year may fall between the two policies: the incoming insurer treats it as a known circumstance excluded from cover; the outgoing insurer says it was never properly notified. That is precisely the outcome the deeming clause is designed to prevent, and the outcome that Kajima shows can still occur if the notification lacks specificity.
The tension is real, but it is not resolved by picking a side. It is resolved by treating notification as a judgement made matter by matter, on the facts of each file, rather than as a blanket policy applied to the whole book at year end. Some matters plainly meet the threshold and should be notified with particularity. Others are speculative and should be recorded internally, watched, and reconsidered if they develop. The discipline is in deciding which is which, documenting the decision, and revisiting it as facts change – not in defaulting to either extreme.
Larger professional firms address this through an internal escalation process. Fee earners flag matters against a defined threshold – a written complaint, a request to return files, a settlement discussion, a limitation date approaching on advice that turned out to be wrong. Those flags feed a risk register that a nominated partner or the COLP reviews quarterly. Where a matter meets the threshold, the firm documents a discussion with the broker on whether to notify. That documented discussion matters. It shows the firm applied its mind, took advice, and reached a decision – useful both if a claim later emerges and if a regulator asks how the firm handled the risk.
A few features tend to distinguish a register that works from one that merely exists. First, the trigger threshold is written down, so a fee earner does not have to guess what counts – a complaint in writing, a demand for a fee refund, an allegation of negligence however informal, or a missed deadline all sit above the line. Second, the register captures the date the firm first became aware, because the promptness of any later notice is judged from that date, not from the day the partners eventually discuss it. Third, the register records the decision reached and the reason, so that a "not yet" is a considered position rather than an omission. Kept that way, the register is both a risk-management tool and a contemporaneous record that supports the firm if the adequacy or timing of a notification is ever questioned.
Notification discipline and limit adequacy are related questions. A firm that notifies a circumstance in one year fixes the limit and excess that will respond to any resulting claim to that year's programme – even if the claim itself does not arrive until later, when the firm may carry a higher limit. That is one reason firms review their limit of indemnity against their largest single engagement rather than their average file: the deeming clause can lock a future claim onto a past year's cover. Where a firm operates under a regulator's compulsory arrangements, the applicable minimum terms and minimum limit are the floor, not the target, and a firm with large or concentrated exposures will usually buy above that floor. Any specific compulsory figure should be checked against the current rules of the relevant regulator rather than assumed, as those figures are set by the regulator and change over time.
A hypothetical mid-sized solicitors' firm sends its insurer, on the last day of the policy year, a notification that reads: "The firm has approximately 30 open matters where a client dispute could conceivably arise." No files are identified, no clients are named, and no acts or omissions are described. Under Kajima, that notification is likely to be insufficient. If any of those 30 matters becomes a claim in the following policy year, the deeming clause may not attach the claim to the notifying year. The outgoing insurer may decline; the incoming insurer may point to it as a known matter.
Compare the specific notification: "Matter reference 2025/1187 in the conveyancing department. Client name available on request. On 14 October 2025 the client wrote to complain that a drainage search omission caused them to complete on a property with an unadopted access. The firm is investigating. A claim for the diminution in value may follow." That notification identifies the file, the client, the act alleged, the date and the nature of the possible claim. It engages the deeming clause on its face.
The contrast also shows how cover responds. If the specific notice is given in the 2025 year and the client issues proceedings in 2026, the claim is deemed made in 2025 and the 2025 policy – its limit, its excess, its terms – answers for it, regardless of what the firm's 2026 programme looks like. The blanket notice offers no such certainty: because it engages nothing in particular, the firm is left arguing which of two insurers should respond, at the worst possible moment.
A notification of circumstance is not itself a claim. It is a protective step that preserves your position under the current policy. It will, however, be disclosed to the next insurer as part of the renewal presentation, and a pattern of notifications can affect how underwriters view the firm. The answer is not to avoid notifying, but to notify the matters that genuinely meet the threshold, with enough particularity that each stands on its own.
Enough that an underwriter who has never seen the file could read the notice, understand which engagement is at risk, appreciate the nature of the alleged act or omission, and open a reserve. The five points above – matter, client, act or omission, date, and reason a claim may follow – are the practical yardstick. You do not need to prove the claim or admit liability; you need to describe the matter.
Most wordings require notification as soon as practicable after the insured becomes aware of a circumstance. Late notification can give the insurer an argument to decline or reduce cover, particularly where the delay has prejudiced its position. This is why the date of first awareness is recorded on the risk register – promptness is measured from when the firm knew, not from when it got round to deciding.
A single sweeping year-end letter is exactly the notice that Kajima found insufficient. Breadth is not the problem; lack of particularity is. If you have several matters to notify, notify each one specifically – a schedule of individually described matters is fine, a single undifferentiated statement that "various matters may give rise to claims" is not.
Yes. A documented discussion with the broker on whether and how to notify is good practice: it brings a view on the wording and the insurer's likely approach, and it evidences that the firm applied its mind. Apex reviews notification protocols as part of a renewal or mid-term review and can help judge borderline matters before they become disputes.
See the companion entry on the distinction between a notification of claim and a notification of circumstance. For sector-specific context, see the solicitors' PI guide, the accountants' PI guide and the architects' PI guide. Apex is happy to review a firm's notification protocol as part of a renewal or mid-term review.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.
