Professional Indemnity Insurance and Early Reporting

The Strategic Value of Early Reporting

In today’s complex world of healthcare and professional services, the stakes are high. A single accusation of negligence or error can have far-reaching consequences – not only financially, but also for your reputation, career and even your ability to secure future insurance cover. Professionals are held to a higher standard, and in a litigious society, claims are on the rise – some valid, others purely opportunistic.

Why Early Reporting Matters

“Medical malpractice and professional indemnity cover provide crucial legal defence. Even when a claim is unfounded, insurers still face costs in defending you – or in paying damages if liability is proven,” says Clarissa Rizzo, Business Unit Head for Professional Risks at Aon South Africa. One of the most effective ways to support that process is through early reporting that will help you to:

• Preserve evidence: Records, documentation, emails and witness accounts are more reliable when gathered quickly.
• Strengthen defence: A strong case often depends on timely access to facts before they’re lost, deleted or forgotten.
• Meet policy requirements: Most policies operate on a claims-made basis, meaning the policy provides cover for any claims made against the policy holder during the period of insurance. Delays in reporting incidents, potential claims or actual claims could result in non-disclosure which could jeopardise your policy resulting in repudiation.

According to Clarissa, there is a definitive cost in delaying reporting matters pertaining to your medical malpractice or professional indemnity cover. “Claims data shows that late-reported matters are consistently more expensive to resolve. The longer the delay, the greater the costs in both legal defence and damages. In worst-case scenarios, failure to report correctly could leave professionals personally liable for millions of Rands in legal costs, settlements or judgements,” she explains.

Early notification also makes it easier for insurers and legal teams to:

• Investigate and assess liability quickly.
• Engage legal counsel or subject-matter experts.
• Explore alternatives such as negotiation, mediation, or early settlement.

“In some cases, early intervention prevents litigation entirely – helping professionals avoid drawn-out proceedings, reputational damage, and unnecessary expenses,” Clarissa adds.

“A common misconception is that reporting a potential claim will automatically increase premiums. In reality, unless a claim results in significant defence costs or a settlement, premiums are not typically adjusted based on notifications alone. Insurers weigh multiple factors when setting premiums, with claims history being just one element,” Clarissa explains.

Making Early Reporting a Strategic Advantage

Early reporting isn’t just best practice – it’s a professional responsibility and a risk-management strategy. The benefits are clear:

• Protects your reputation and career.
• Preserves critical evidence.
• Ensures your policy responds when you need it most.
• Reduces financial exposure.
• Supports faster, more efficient resolutions.

“It is important to make sure your reporting procedures are clear and accessible and I would encourage any professional to adopt a culture of escalation while maintaining open communication with your brokers. In today’s risk-conscious environment, early reporting is not a liability – it’s one of the most effective tools for managing risk,” Clarissa concludes.