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Professional indemnity insurance


Published: 17 Jun 2014 Updated: 04 Jul 2023 Update History

Professional indemnity insurance (PII) is compulsory for all ICAEW members who have a practising certificate and engage in public practice. PII is a requirement for a number of regulations.

PII Regulations

The regulations relating to audit, insolvency, probate, investment business and the eligibility requirements for a practising certificate (PC) all require members and firms to comply with ICAEW's PII Regulations. The PII Regulations give details of the amount of insurance required, insurers and the policy wording insurers must use. 

The regulations have been updated due to changes to ICAEW’s disciplinary framework. The amendments are consequential changes only. For example, some committee names have been updated and references to specific Disciplinary Bye-laws have changed.

Qualifying insurance

When obtaining PII or renewing existing cover, members should ensure they arrange qualifying insurance and check the following.

  • The insurer is on the list of the current list of participating insurers (and if the insurance is provided by more than one insurer, that all insurers are participating).
  • The cover meets the minimum limits of indemnity set out in PII regulations.
  • The policy provides cover which meets ICAEW’s approved minimum wording and includes at least six years’ retroactive cover (ie, cover for claims arising in relation to advice, services and business activities carried out during the last six years).

Participating insurers

You must obtain the insurance required by the PII regulations from a participating insurer. These insurers have agreed to meet the requirements of ICAEW's minimum approved policy wording. The fact that an insurer is on the list does not imply that ICAEW has performed independent checks on the insurer's suitability. ICAEW recommends that you investigate the current ratings and discuss with your brokers the suitability of these insurers when you take out or renew your insurance.

PII minimum approved policy wording

Qualifying insurance is underwritten in terms of the minimum wording, which is approved by ICAEW. Policies must use this wording or contain a difference in conditions endorsement.

Non-members can download an order form to obtain historic copies of ICAEW's minimum approved policy wording.

The Difference in Conditions Clause

All participating insurers have agreed to provide cover under terms that match those of ICAEW's approved minimum wording. Many insurers use their own policy wording and, in some instances, this will include extensions of cover beyond the cover that is required under the minimum wording. Participating insurers which use a different policy wording must also include a difference in conditions (DIC) clause in the policy and, as an extra safeguard, in the absence of an express DIC clause, it will be deemed to apply. In the event of a dispute between a policy holder and their insurer, the difference in conditions clause should ensure that ICAEW's minimum wording overrides any provision in the insurer's wording that is less favourable to the insured.

All ICAEW compliant policies should include a DIC clause and there is provision in ICAEW’s contract with each insurer for firms to enforce this requirement. If you require further information about this, please call +44 (0)1908 248 250 or use our Live Chat service.

Renewal of PII

It is recommended that firms prepare early for their renewal and that they provide complete and accurate information to insurers at the outset to ensure a smooth renewal or transfer of cover to another insurer.

Generally, insurers are reviewing more critically the risks they are willing to accept and the price they will set for cover. This may particularly affect firms with a claims/notifications history and/or those involved in ongoing legal action and/or firms engaged in activity which insurers perceive to be high risk (for example, tax mitigation schemes, investment advice, insolvency, M&A and audit work).

The PII Committee recommends that firms prepare early for their renewal and that they take advice from a trusted and reputable broker or other adviser when taking out their insurance. The Committee recommends firms discuss their placement strategy with their broker to ensure access to a number of different insurers; specifically, firms may wish to clarify whether their brokers are ‘whole of market’ brokers. If firms are unable to obtain a new policy before their current policy expires, they should note that their last insurer is required, under the minimum approved wording, to extend cover for an additional 30 days (see clause D3).

  • Fair presentation

    Firms have a legal obligation to make a fair presentation of the risk on taking out or renewing cover. Therefore, in order to safeguard the indemnity available for a claim should it arise, it is essential that firms are open and transparent with their insurer/prospective insurer when taking out or renewing cover as to:

    • the activities they undertake;
    • their claims history and any potential claims (or grounds to suspect a claim - ‘circumstances’);
    • their risk management strategy;
    • their approach to managing Covid-19 related disruptions; and
    • their disciplinary/regulatory history.

    In-depth and complete information should be provided at the outset of the renewal process in an effort to make proposals more attractive to insurers, and to assist in obtaining a timely response from insurers as to whether cover terms will be offered.

    The duty of fair presentation introduced by the Insurance Act 2015 has resulted in a number of changes to PII.

  • How to avoid costly mistakes

    Professional Standards' PII Manager, Sarah-Jane Owen, joined the Small Practice Community to discuss these issues and how to avoid expensive PII mistakes.

Problems obtaining insurance

The current market has made it challenging for some members to obtain compliant PII or to renew their existing cover. ICAEW recommends that members take necessary steps to ensure there is no gap in insurance cover which would be a breach of the PII Regulations.

If you are struggling to obtain PII, you should consider the following:

30-Day Extended Policy Period (EPP)

Members should ensure that their broker understands their business and can access all insurers on the participating insurers list (and that the broker is not tied to a particular insurer). If you have not obtained qualifying insurance prior to expiry of your current policy, it is possible to extend the existing policy by 30 days - (See ICAEW’s minimum approved policy wording clause D3.)

Assigned Risks Pool (ARP)

The ARP is for firms that are unable to obtain PII in the insurance market. It provides emergency cover for a period of up to two years but can be expensive. Run-off cover can also be provided in the ARP.

To enter the ARP, members need to arrange payment of the Initial Deposit Premium. A final premium will then be assessed.

Further information can be found on the Assigned risks pool webpage and you can also contact the ARP manager.  

Gaps in PII cover

ICAEW’s Professional Standards Department shares the latest advice on PII and the importance of making sure there are no gaps in your PII cover.

PII considerations

PII and tax mitigation schemes

Insurers take a cautious view of insuring firms that advise on or introduce clients to tax mitigation schemes.

Section 8 of the guidance, “Professional conduct in relation to taxation”, gives advice to firms on how they should deal with tax schemes, including if the only involvement is to make introductions to other firms.

ICAEW’s engagement letters helpsheet includes material provided by the Tax Faculty for tax practitioners about specialist and ad hoc tax advisory services.

Ukraine crisis

The PII Committee is aware that the crisis in Ukraine may be impacting some insurance renewals. Insurers are likely to ask questions about a firm’s activities and its clients in the wake of the UK Government imposing sanctions on Russia. In some cases, insurers may also seek to add additional sanctions clauses to policies. It is recommended that firms contact their broker to discuss what additional information may be required at renewal so that this can be prepared at an early stage and help to reduce delays in the renewal process. Firms should also be aware that ICAEW’s minimum approved wording contains a sanctions exclusion at clause E18.

Further resources on the impact of the Ukraine crisis on accountancy, business and the wider community can be found in the Ukraine crisis-central resource hub.

Run-off cover

It is important that members have “run-off” cover after ceasing to practice. This is to cover claims for work done while in practice but arising after the practice ceased. This requirement is in a member’s own interest whether or not a future claim is anticipated (PII regulations 2.7-2.8 and 6.28-6.30).

Where firms cease, the members in practice in the firm must ensure that compliant cover is in place for at least two years, and thereafter they must use their best endeavours to maintain compliant run-off cover for a further four years (PII regulation 2.8).

Common questions

  • What do I have to tell my clients about my PII?

    Under the requirements of the Provision of Services Regulations, you have to disclose information about your PII to clients. 

  • What do I have to tell ICAEW about my PII?

    If you are a PC holder, we will send you (or your firm) an annual return approximately one month before your PII renewal date. The PII section of the annual return asks for information about your PII. 

  • Do I need PII if I do not engage in public practice?

    If you hold a PC but do not engage in public practice, you do not need PII. 

    Please be aware if you return to practise, you will require PII immediately, and ICAEW should be notified.

    To notify ICAEW, please email firms.admin@icaew.com.

    Alternatively, if you plan to provide regulated services, please email regulatory.support@icaew.com

  • Do I need PII after I've ceased to practise? (See section for run-off cover.)

    It is extremely important that you secure run-off cover for your previous practice after you cease to practise. This is to cover you for claims for work done while in practice but arising after the practice ceased. This requirement is in your own interests whether or not you think you might have claims in future.

    Where firms cease, the members in practice in the firm must ensure that compliant cover is in place for at least two years, and thereafter they must use their best endeavours to maintain compliant run-off cover for a further four years (regulation 2.8). It is recommended that the terms and extent of any cover are equivalent to any previous qualifying insurance. You should continue to assess your need for such cover each year until you are satisfied that there is no possibility of a claim being made. It is recommended that you consider maintaining run-off cover for six years after you cease to practise. 

    If a member is ceasing to practise (rather than the entire firm) then the member is required to use their best endeavours to ensure they are covered by arrangements which comply with ICAEW's regulations. Cover should be in place for at least two years after they cease (regulation 2.7). Run-off cover may be provided under the policy of a continuing practice or you may need to take out an individual policy. If your former practice has undertaken to include run-off cover for you in its current cover, you must remember to check that it continues to cover you for at least two years. At the end of that time, you should consider whether you need continued cover. If you are thinking about retiring/an exit strategy then you should speak to your broker about run-off cover.

  • How do I obtain a copy of a previous version of the PII regulations?

    The current PII Regulations and information relating to PII can be found on this webpage for Professional indemnity insurance.

    Pre-2015 versions of the PII Regulations and minimum policy wording are available on request. Please email pii@icaew.com.

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