Top Five Causes of Professional Indemnity Insurance Notifications in 2025

Every notification made to Aon Insurance Brokers (M) Sdn Bhd (“Aon”), the insurance broker for the Malaysian Bar’s mandatory Professional Indemnity Insurance (“PII”) Scheme, begins with a step in a lawyer’s practice that went unnoticed, overlooked, unrecorded or unverified.  In some cases, there may have been no apparent error or omission by the lawyer, yet notification is still required as it could represent a circumstance that might give rise to a future claim.

While covered by the PII Scheme, lawyers in Malaysia cannot avoid the possibility of higher premiums.  This can occur if there is an increase in notifications and damages paid by the Insurer.  The PII Scheme operates as a group scheme, with premiums determined by collective statistics.

Based on the statistics from the past five years, the PII Scheme has seen a steady decline in the number of notifications.  Conveyancing and civil litigation remain the practice areas with the highest number of notifications.  These figures highlight the need for closer attention in these areas, as they are more prone to mishaps.

Table 1 shows the top five causes for PII notifications from 2021 to 2025. 

       

Table 1 

It is important for Members of the Malaysian Bar to take note of the data from the past five years, as it highlights key trends and reinforces the need to remain aware of the risks involved in practice.  

            

As of 17 Nov 2025, the PII Scheme has registered a total of 183 notifications, namely, 35.50% for conveyancing, followed by 33.30% for civil litigation.  The Scheme is also seeing notifications involving identity theft where a law firm’s name or a lawyer’s identity is being impersonated.  
 
Based on the PII notifications for 2025, the following sub-causes have been identified: 

(1) Failure to Advise Client (13.1%) 
The top sub-cause is failure to advise the client.  This problem typically occurs when the lawyer involved fails to provide a clear statement to the client or when the document is incomplete.  It may occur at any stage and often stems from a lack of clarity, insufficient documentation or poor communication practices.  
 
(2) Breach of Stakeholder’s Duty (12.6%) 
Breaches occur when lawyers fail to follow the outlined terms, including verifying instructions and obtaining written consent before taking action on behalf of the client.  
 
(3) Third-Party Fraud (9.3%) 
In recent years, third-party fraud has become an increasingly significant concern as impostors become more skilled at deceiving the parties involved.  The majority of these notifications originate from conveyancing, often involving lawyers who fail to conduct proper due diligence.  
 
(4) Acting in Breach of Conveyancing Practice (5.5%) 
These notifications generally arise from non-adherence to standard conveyancing procedures.  Common issues include lack of familiarity with applicable laws and procedures, failure to conduct proper verification exercises and necessary documentation, and improper handling of undertakings.  
 
(5) Failure to Prepare Documents Properly (5.5%) 
Errors include incorrect drafting, unclear or inconsistent terms, omissions, incomplete documentation and inadequate internal review.  Despite most notifications originating from conveyancing practice, this sub-causation occurs across all practice areas.
 
What These Trends Mean for Lawyers 

The data collected since 2021 reflects the errors and omissions reported to the PII Scheme and highlights the potential risks associated with daily work.  Despite a reduction in the total number of notifications reported over the years, Table 1 shows that underlying risk behaviours have remained largely unchanged.  

To mitigate daily risks, Members should take advantage of the Malaysian Bar’s initiatives such as the MyBar Risk Management Podcast, Client Account Campaign Talk and ELEVATE Tools Spotlight.  These initiatives serve as a guide to delivering quality services and avoiding unnecessary claims that could jeopardise their practice and public trust.  Many issues are preventable if precautionary actions are taken early.  Ultimately, the information serves as a reminder for lawyers to remain vigilant.

Members who suspect any instances of impersonation, whether of their firm or themselves, should notify the Malaysian Bar and Aon immediately.  Generally, if you receive a claim, letter of demand or become aware of any circumstances that could lead to a claim, you must notify Aon in writing within 60 days of becoming aware.  Prompt reporting ensures the incident is properly assessed and protects lawyers’ interests.