Every company director and professional in Australia who holds PI insurance is now entitled to retrospective cover.

Following a decision by the High Court, insurance companies must now pay out PI claims that are lodged after the policy has lapsed but which were in the pipeline during the period of cover.

Clayton Utz Partner Chris Coyne said the decision means Australia is “now out of step with the international insurance market” where all PI policies are written on a strict “claims made” basis.

Australian companies will now have to make provisions for claims still to be made up from five or 10 years ago, Mr Coyne said. “Looking ahead, they will find it difficult to negotiate consistent insurance arrangements with the international market.”

About 50% of the PI market was formerly held by HIH.