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Aipedia: Insolvency practitioners
AI can classify, search and summarise seized books and records, but the IP must check what the tool missed as well as what it found. Key documents that never surface can mean lost recoveries and negligence claims.
Part of: AI in Insolvency practitioners
In short
R3 found 81% of surveyed insolvency professionals use document digitisation, and AI review can help triage large record sets. The weak points are documents the tool cannot read, search terms that miss the real language, and summaries that drop key details. The Insolvency Code of Ethics requires the IP to judge whether output is appropriate (R321.1), to watch for insufficient data (115.1 A6) and to protect confidentiality (R104.3 to R104.6). PI usually responds to missed-recovery claims; data breaches usually need cyber cover.
On appointment, an office holder may take possession of physical files, laptops, email accounts and cloud systems. R3's 2026 survey found 81% of respondents use document scanning or digitisation, while 31% still hand-copy some documents. Once records are digitised, AI tools can classify documents, extract data, search for key terms and summarise correspondence, so the team can focus on what matters.
Review tools may be used to triage large email sets in investigations, surfacing documents about connected parties, asset transfers or directors' knowledge of insolvency. The quality of the result depends heavily on the condition of the records, which in a failed business are often incomplete, disordered or partly held on personal devices.
The Insolvency Code of Ethics sets the standard:
R3's top barrier to AI adoption was data security and confidentiality (54%), which reflects how much sensitive material sits in a company's records.
Illustrative scenario: a firm digitises a company's records and runs an AI review for documents about transfers to connected parties. A handwritten board minute approving the sale of equipment to a director's new company is scanned at low quality and not text-recognised, so the tool never surfaces it. The review report says no relevant documents were found. Months later, the director's new company is itself in difficulty and the opportunity to recover the equipment's value has gone.
Failure points include:
A claim that the office holder missed key documents and so failed to pursue a recovery is a professional negligence claim. PI usually responds, subject to the policy terms and excess. A data breach involving the records is a different risk: depending on the wording, PI may respond to third-party claims for breach of confidence, but costs such as forensic investigation, notification and system restoration usually sit with cyber cover. See where cyber and PI cover begin and end and debtor and creditor data in AI tools.
R3 records that some practitioners are unsure whether PI would cover AI errors at all, so ask for confirmation rather than assuming.
Apex arranges PI for insolvency practitioners, and a broker can look at how PI and cyber cover fit together for document-heavy work. See the PI guide for IPs and the insolvency practitioners hub.
It can speed up review, but the IP must decide whether the output is appropriate for the purpose under R321.1. Tools miss documents they cannot read and searches miss unexpected wording, so record what the tool covered and review gaps manually.
If creditors lose a recovery as a result, they may claim against the office holder. Contemporaneous records showing what was reviewed and why help the defence, and PI usually responds to the negligence claim, subject to the wording.
No. Summaries are useful for triage, but they can omit a date, a qualification or a signature that changes the meaning. For documents that support a claim, a conduct report or a decision not to pursue something, the reviewer should read the source and record that they did so.
The IP remains responsible for confidentiality and must evaluate the provider's work and review the arrangement under R320.3 and R320.5. Contract terms with the provider and your cyber and PI wordings will determine where any resulting loss falls.
Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.
Start a PI quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.
