Top five indemnity claims revealed

What were the top professional indemnity claims for accountants in 2019? Bluefin, the insurance specialist for professions, delves further into the risks facing the profession today.

February 2020

It’s that time of year again when we take some time to pause and reflect on the past 12 months and look forward to the new year, and in this case a new decade.

There have been no real movers or shakers in the traditional Top Five claims drivers last year. These remain (in terms of volume):

1. General Accountancy
2. Tax
3. Insolvency 
4. Audit
5. Transactional/Corporate Finance

As far as tax is concerned, we are still seeing the tail end of the film finance scheme claims which are, due to the passage of time and expiry of limitation, largely at an end. They are instead being replaced with a steady, although not alarming, flow of claims relating to employee benefit trusts (EBTs) and employer financed retirement benefit schemes (EFRBs). 

Errors or omissions in advice surrounding business property relief (BPR) also account for a fair volume of claims. These types of claims tend to be associated with a poor documentary trail as to (a) what advice was given and (b) whether there was a duty to give advice relating to BPR (sometimes due to a blurring of the lines as to who is the client).

Therefore, this comment comes with a gentle reminder to ensure Terms of Engagement are sent, are accurate and for subsequent advice to be recorded. This should ensure you are ideally placed to assuage any complaint should one be received.

As regards insolvency claims, in testing or uncertain economic times these will always be abundant, whether valid or not, and we anticipate that these will remain in play going into the new decade. The economic backdrop in 2019 has continued to be a factor in audit claims and perhaps one of the highest profile claims of 2019 is the ongoing spotlight on the auditors for the failed high street bakery chain, Patisserie Valerie.

See more analysis from Bluefin in London Accountant’s Tax and Financial Reporting section

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For more information about the insurance and risk management services Bluefin Professions offers, call 0345 894 4684 or email icaew@bluefingroup.co.uk

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