Professional indemnity claims in the UK turn on two distinct legal questions, often elided in correspondence but kept rigorously separate by the courts. The first is whether the professional fell below the standard of a responsible body of opinion in the relevant field — the Bolam question. The second is whether the loss the claimant has suffered is the kind of loss falling within the scope of the duty the professional owed — the SAAMCO question. A claimant must clear both hurdles. A defendant can defeat a claim on either.
The Bolam test comes from Bolam v Friern Hospital Management Committee [1957] 1 WLR 582. A professional is not negligent if their conduct accords with a practice accepted as proper by a responsible body of opinion in that profession, provided that body's view withstands logical analysis (the gloss added by Bolitho). Bolam is the breach test.
The SAAMCO principle, from South Australia Asset Management Corporation v York Montague Ltd [1996] UKHL 10, asks a different question. Even where a professional has been negligent, a defendant is liable only for losses falling within the scope of the duty assumed. Lord Hoffmann's distinction between an adviser (responsible for the consequences of the course of action advised) and an information-provider (responsible only for the consequences of the information being wrong) reshaped the law on recoverable loss in PI claims.
The Supreme Court restated and structured the SAAMCO analysis in Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20. The judgment sets out six questions a court should work through in sequence:
Bolam sits inside the breach question. SAAMCO sits inside the scope and nexus questions. The framework forces the court to decide what kind of duty was owed before asking whether it was breached, a meaningful shift from older sequencing.
The structured approach has a practical consequence. A claimant may show convincingly that the professional was negligent under Bolam, yet recover less than the full headline loss — or nothing — because the loss suffered is outside the duty's scope. The classic SAAMCO illustration is a negligent valuation followed by a market collapse: the valuer is responsible for the over-valuation, not the wider fall in property prices.
A surveyor values a commercial property at £1m. A responsible body of valuers would have valued it at £800k. A lender advances on the strength of the valuation, the borrower defaults, and the property is sold for £450k. The lender's actual loss is £550k — £200k of over-valuation, plus £350k attributable to a subsequent market crash.
Applying the framework: Bolam is met (a responsible body would not have produced the £1m figure), so there is breach. The SAAMCO question caps recovery at the loss within the scope of the duty — the £200k attributable to the information being wrong. The market-crash element falls outside the duty of an information-providing valuer. The lender recovers £200k, not £550k, despite having 'won' on breach.
For PI insurers handling a notification, the framework changes the shape of reserving and settlement discussions. A robust scope-of-duty argument can compress quantum even where breach is conceded or hard to defend. Settlement value is no longer a simple multiple of headline loss; it depends on what slice of that loss the duty was designed to guard against. For the insured professional, the analysis affects whether the claim erodes the limit of indemnity in any meaningful way.
Apex's role as a broker is to make sure the policy responds and to keep the insured's position properly presented to the insurer. The legal questions are for the appointed panel solicitor; the commercial framing — what is at stake, where leverage lies, how the notification is recorded — is where broker support is felt. Profession-specific context shapes the analysis: surveyors, solicitors and accountants each face different scope-of-duty questions because their retainers assume different kinds of duty.
Further reading: the Bolam test; the SAAMCO principle; Manchester Building Society v Grant Thornton; Bolam applied to surveyors. Sector pillars: surveyors' PI insurance, solicitors' PI insurance and accountants' PI insurance.
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.