Asha had professional indemnity insurance. In 2021, she lodged a claim with her insurer about a hearing before her profession’s disciplinary body.
Asha’s claim was accepted. The insurer selected a lawyer from their legal panel to represent Asha before the disciplinary body.
By June 2022, the relationship between Asha and her lawyer had significantly deteriorated. The insurer decided to appoint a different lawyer from their panel to represent Asha.
Asha had a difficult relationship with her new lawyer. In July 2023, her lawyer told the insurer about a tense telephone call he had with Asha. The lawyer said Asha’s communications were aggressive and abusive, and that they were interfering with his ability to represent her efficiently.
The insurer sent Asha an email explaining that they were not prepared to tolerate her behaviour any further. They said her communications fell short of her obligation under her policy to act reasonably, and that they would take stepsto end her cover if her behaviour continued.
Asha was upset with the email she received and complained to FSCL.
Dispute
Asha did not accept that her behaviour towards her lawyer was rude or unacceptable. She said the insurer had not followed an appropriate process because they did not contact her before they sent the email. They only had contact with her lawyer.
Asha also said the email had prejudiced her. It had caused her to lose all confidence in her lawyer, and it caused anxiety that cover for her claim may end. She wanted to choose her own lawyer.
The insurer said they had acted reasonably. They considered that the relationship between Asha and her lawyer had deteriorated so rapidly that they had to intervene. The relationship breakdown was impacting on the lawyer’s ability to deal with the matter before the disciplinary body in an efficient and cost-effective way.
Review
We concluded that the insurer’s actions were reasonable. They had reasonable grounds to conclude that Asha’s conduct fell short of the conditions of her policy. She had used an aggressive tone in her emails to her lawyer, and it was reasonable for the insurer to accept the lawyer’s recollection of the phone conversation at face value.
Asha was not prejudiced by the email. She still had cover for her claim, and we were satisfied that the insurer would not end cover without giving her an opportunity to make her case for why cover should continue.
The insurer was not obliged under the policy to pay for a different lawyer that Asha chose. It is standard industry practice for professional indemnity insurers to assign lawyers from their legal panels.
Resolution
We suggested that Asha should discontinue her complaint. She did not agree with our suggestion, but her further submissions did not change our view.
Insights for participants
Professional indemnity insurers can end cover if the insured’s conduct breaches the terms of the policy. However, we expect insurers to follow a fair process before ending cover. The insurer should give the insured an opportunity to state their case for why cover should not end.
If an insurer ends cover, the insured may be able to complain to FSCL if they do not accept the insurer’s reasons for ending the cover.
