Nairobi, 7 November 2025

Across Kenya’s insurance landscape, the frequency and complexity of professional liability claims are steadily increasing. Whether arising from valuation errors, advisory missteps, or boardroom decisions, these cases underline one crucial truth — professional competence and accountability are inseparable.

At the heart of these issues lie two critical covers: Professional Indemnity (PI) and Directors & Officers (D&O) Liability. Both serve as vital tools for protecting professionals and corporate leaders from the financial consequences of alleged negligence, omission, or breach of duty.

Professional Indemnity: The Duty of Care

Professional Indemnity insurance safeguards individuals and firms against legal liability for losses arising from their professional services. The cornerstone of this coverage is the duty of care — the legal obligation to act with the skill, prudence, and diligence expected of a competent professional.

In Kenya Commercial Bank v Philip Odongo Kabita, the Court held that a valuer who failed to properly verify a property’s details was negligent, observing that “to err may be human, but for a professional to err as a result of not applying professional skills and tools is negligence in any language.”

Similarly, in Gulf African Bank Ltd v Hanif Tours & Travel Agency, a valuer who relied on client guidance rather than verifying the property independently was found in breach of duty. In Trans-National Bank of Kenya Ltd v Charles Kimita Willy, the Court reaffirmed that professionals are expected to exercise independent judgment and must not delegate verification to clients or third parties.

These rulings collectively reinforce that negligence arises not only from errors, but from the failure to apply due professional process.

Directors & Officers Liability: Managing Leadership Risk

Directors & Officers Liability (D&O) insurance protects company leaders from personal financial loss due to claims alleging wrongful acts in the management of the organization.

Commonly covered wrongful acts include misrepresentation, breach of fiduciary duty, or failure to comply with regulatory obligations. Importantly, most D&O policies distinguish between honest mistakes and deliberate misconduct.

For example:

• Where directors act in good faith but are later accused of poor judgment or procedural errors, D&O cover extends to defense costs and compensatory damages, provided no dishonest intent is proven.

• Conversely, where fraud or deliberate misrepresentation is established, coverage is excluded — though other innocent directors remain protected.

This distinction is central to ensuring fairness while maintaining the integrity of corporate governance and insurance practice.

Common Coverage Challenges

Both PI and D&O claims often encounter disputes on the basis of policy interpretation. Key areas include:

• Fraud and dishonesty exclusions — deliberate acts void cover.

• Late notification — delays in reporting potential claims can prejudice an insurer’s ability to defend.

• Non-disclosure — failure to declare prior known circumstances before policy inception.

• Causation and quantum disputes — determining whether the professional’s error directly caused the claimed loss.

• Documentation — insufficient engagement letters, correspondence, or records can weaken defenses.

Capacity Building for Insurers and Professionals

For insurers and intermediaries — particularly those under the Association of Kenya Insurers (AKI) — these cases illustrate the growing need for technical training and awareness around professional liability exposures.

At Specialty Claims Academy (SCA), our focus is on strengthening market capacity in technical claims handling, risk analysis, and policy interpretation for PI and D&O risks.

Through customized workshops and practical case-based training, SCA supports insurers, loss adjusters, and financial professionals in navigating the evolving landscape of professional liability in Kenya and the wider region.

Organizations seeking to enhance technical competency in this field are encouraged to engage with SCA for tailored training programmes and collaborative initiatives.

📧 training@specialtyclaims.co.ke
🌐 www.specialtyclaims.co.ke

Author:
Daniel M. Mwangi
Bsc.,MBA, Dip CII, ACILA
Associate Director – General Adjusters Kenya Ltd
Council Member, Institute of Loss Adjusters & Risk Surveyors (IARS)