The Solicitors Regulation Authority (SRA) mandates a base level of Professional Indemnity Insurance (PII): £2m for partnerships and £3m for incorporated firms. Anything above that is discretionary, but increasingly vital.
A common misconception? That the “right” limit should align to average contract values. In reality, many high-severity claims stem from advisory exposure, process failures, or third-party reliance, none of which relate directly to contractual amounts.
Some firms unknowingly over-insure, absorbing unnecessary cost. Others carry limits that fall far short of what is actually needed in a claim scenario.
01
Pressure from clients and contracting parties
Sophisticated clients—especially corporate or institutional ones—are requesting higher PII limits in engagement terms. This is particularly relevant where:
- Firms act as panel advisers for banks, pension trustees, or large multinationals
- Multi-party advice creates shared reliance on professional output
- M&A or transactional deals carry ancillary risk across jurisdictions
If your limit hasn’t been reviewed alongside these evolving relationships, it may no longer reflect operational realities.
02
Claim severity has grown
While claim frequency has remained relatively stable, average settlement values have risen. A typical conveyancing or trust dispute that might once have settled within the primary layer now regularly extends into the first or even second excess layers—especially with legal costs, regulatory investigation, and reputational loss factored in. Conveyancing and private client work account for over half of the claims received by insurers, with claims severity exacerbated by an aging population and the challenges posed by the lack of supervision during COVID.
03
Benchmarking works—but only if you go deep
At WTW, we benchmark not just total limits—but limit-to-fee ratios, claim types, and layer configuration. We are continually exploring alternative structures to determine whether our clients have adopted the optimum layering of their PII placement, maximising premium efficiencies, and capitalising on the current, more favourable market conditions. For example, a corporate firm with £25m turnover might carry anything from £10m to £50m in indemnity. The right answer depends on:
- Whether they operate cross-border
- If they advise on fund structuring or tax
- The firm’s historic claims profile
- Whether the overall work split consists of mostly private or commercial litigation
04
Structuring excess layers—The ProXS advantage
Firms looking to buy higher cover often face inefficiencies when building layers. That’s why WTW launched ProXS, our specialist facility that gives fast, flexible access to cover from £10m to £50m.
- The ability to purchase one excess layer consisting of £40m
- Two independent insurer panels (Lloyd’s + Company Market)
- These panels can either compete, stack or combine to offer the most effective solution
- Expediating cover changes mid-term—e.g. increasing limits, up to £50m can take hours, not weeks
For growing firms, this brings agility to their risk posture, providing comfort that their PII will not hinder commercial decisions.
05
“Fit-for-purpose” means fit for the year ahead
A basic benchmarking exercise may not always provide the best assurance and peace of mind. Perhaps ask:
- If a significant claim landed this year, would your current policy fully respond?
- Are you issuing limited liability caps and is there appropriate oversight by management when issuing unlimited liability caps?
- How often do you review your PII limits and are you paying for layers that no longer reflect your exposure profile?
"Each law firm is unique and so your Professional indemnity programme should be just as distinct. It should match the real shape of your risk, and be structured to flex as your firm evolves, future proofing your risk transfer solution." Babbar Abbas, Senior Associate, WTW Solicitors PI Team
