Professional Indemnity (PI) Premium Written
Underwriting a professional indemnity policy for an accounting or law firm.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Premium Receivable — PI | Asset (+) | 5,500.00 | - |
| Written Premium — Professional Indemnity | Revenue (+) | - | 5,500.00 |
💡 Accountant's Note
PI covers professionals against claims for negligence in their professional services. Claims are made-and-reported basis — the policy year when the claim is reported controls which policy responds.
Practitioner & Systems Framework
💻 ERP Architecture
PI policies are written on a claims-made basis — the policy admin system must be configured to correctly record the retroactive date and the claims-made year. The retroactive date determines how far back in time an insured event can trigger the current policy. When a PI claim is reported, the claims system identifies the correct policy year based on the notification date. Run-off provisions (for extended reporting periods after policy expiry) are a significant reserve item for PI.
⚠️ Audit Flags
Auditors verify that the retroactive date and claims-made structure are correctly recorded for each PI policy. Test that claims are assigned to the correct policy year based on the notification date, not the date the negligent act occurred. Run-off reserves for expired PI policies with open claims must be adequately maintained. For professions with regulatory reporting requirements (e.g., accountants, lawyers, engineers), confirm that minimum mandatory limit requirements are met.
📄 Required Documentation
Proposal form with profession details, fee income (premium basis for PI), retroactive date confirmation, claims-made basis disclosure in the policy schedule, prior claims history, run-off reserve schedule for expired policies, and regulatory minimum limit compliance confirmation.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.