Professional Liability Claims Are Down. So Why Are Firms More Exposed Than Ever?

One of the questions I get asked often is whether professional liability claims are actually on the rise or whether firms are simply more aware of their exposure than they used to be.

The honest answer might surprise you.

The good news first.

Overall, claims frequency is down. Fewer professional service firms are getting sued today than they were several years ago. That is genuinely encouraging, and it reflects the fact that firms have become more careful about documentation, communication, and contract terms.

The part that concerns me.

What has changed significantly is the dollar amounts being paid out on the claims that do occur. What settled for a million dollars five years ago is easily a two-million-dollar claim today. Inflation, rising construction costs, increased legal fees, and larger jury awards have all contributed to that shift. The frequency may be lower, but the severity has gone up substantially.

That distinction matters more than most firms realize.

What this means in practice.

A policy that felt adequate at your last renewal may not reflect what a claim actually costs in today's environment. Coverage limits that made sense two or three years ago may leave a significant gap if a claim lands on your firm now. The exposure is not necessarily more likely than it was, but the financial consequences of being underinsured have grown considerably.

This is one of the most important conversations I have with the firms I work with, and it is exactly why we push for a real coverage review every year rather than simply renewing what was already in place. Renewing a policy is not the same as evaluating whether that policy still fits. The landscape has changed, and your program should reflect that.

The bottom line.

Lower claims frequency is good news. Rising severity is a real and present risk. If your firm has not revisited its coverage limits recently, that conversation is worth having sooner rather than later.

Reach out at pciaonline.com or call 800-969-4041.