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Aipedia: Insolvency practitioners
UK insolvency practitioners are adopting AI for document review, investigations and reporting, but no RPB has issued AI guidance, so the Insolvency Code of Ethics sets the rules. Errors in investigations, claims or creditor reports can lead to claims that test both the bond and PI cover.
Part of: AI in Insolvency practitioners
In short
In R3's August 2026 survey of 42 members, 81% of respondents used document scanning or digitisation and 52% used generative AI, often informally. No RPB has issued AI-specific guidance. The Insolvency Code of Ethics applies instead: R321.1 requires the IP to decide whether technology output is appropriate for its purpose, and the Code warns of automation bias. Errors in SIP 2 work, claims or creditor reports remain the office holder's responsibility. The statutory bond and compulsory PI are separate protections, and practitioners report uncertainty about whether PI covers AI errors.
Insolvency work is document heavy. An office holder may take control of years of books and records, bank statements, creditor correspondence and director emails, then has to investigate, realise assets, agree claims and report to creditors on statutory timetables. That makes it a natural target for automation.
The clearest picture comes from R3's report The impact of AI and automation in restructuring, turnaround and insolvency practice, published on 4 August 2026. It draws on a survey of 42 R3 members carried out between December 2025 and March 2026, plus interviews. Among respondents:
The uses described include data extraction and document review, drafting SIP 2 investigation answers from digitised evidence for the IP to review, forensic bank statement analysis, reporting and compliance automation, internal knowledge chatbots and pre-appointment onboarding. Respondents saw proof of debt handling and progress reports as a major near-term opportunity.
The sample is small, so treat the percentages as indicative.
Only a person "appropriately authorised" may act as an insolvency practitioner, under section 390 of the Insolvency Act 1986. Authorisation and regulation sit with the recognised professional bodies (RPBs), such as the IPA and ICAEW, with the Insolvency Service as oversight regulator.
No RPB or Insolvency Service AI-specific guidance was found as at October 2026. R3's own report records practitioners' concern about "the lack of clear, practical guidance from the Recognised Professional Bodies", and only around one in ten respondents agreed that current regulation and standards adequately address AI. Some interviewees suggested a dedicated Statement of Insolvency Practice on AI.
The binding rules are therefore the general ones in the joint Insolvency Code of Ethics, approved by the Joint Insolvency Committee and incorporated into the IPA Code of Ethics. Its technology provisions mirror the IESBA revisions adopted by accountancy bodies:
Our Insolvency Code of Ethics explainer sets these out paragraph by paragraph. ICAEW-licensed IPs are also subject to the ICAEW Code technology revisions, covered in the accountants guidance page.
No IP sanction, disciplinary notice or court decision involving AI had been identified as at October 2026, so these risks come from how the work is done.
Insolvency practitioners carry two separate protections. The statutory bond, required for each appointment by section 390(3) and Schedule 2 to the Insolvency Practitioners Regulations 2005, secures the "proper performance" of the IP's functions. Its specific penalty sum must be at least the value of the insolvent's assets, between £5,000 and £5,000,000, with a general penalty sum of a further £750,000 and a claims period of at least two years after release. The bond is not PI.
PI cover is a separate requirement set by each RPB. The IPA PII guidance says its PII Regulations "make PII compulsory for Individual Members", caps the excess at £20,000 per principal and warns that failing to maintain PII "may also invalidate your Insolvency Bond". ICAEW's PII Regulations apply to insolvency bodies, with a minimum limit of £2m, or 2.5 times fee income with a £250,000 floor where fee income is below £800,000.
No RPB or insurer statement on AI and PI was found. R3 reports that "some practitioners are unsure whether their PI policies would cover errors arising from AI use", and calls for the profession, regulators and insurers to discuss how AI risk is assessed and priced. In general, a civil liability PI wording usually responds to a negligence claim whether the error came from a person or a tool, subject to the policy terms, but wordings differ and some contain technology or data exclusions. See bond vs PI for AI errors, our PI guide for insolvency practitioners and the IP PI cover wiki entry.
Apex arranges PI for insolvency practitioners and firms. A broker reviews your cover against your RPB's requirements and checks how your wording treats AI-assisted investigations, reporting and claims work. See PI broking for insolvency practitioners or whether IPs need PI.
No RPB or Insolvency Service AI-specific guidance was found as at October 2026. The binding position comes from the Insolvency Code of Ethics, especially R321.1 on using technology output, together with the duties on supervision, confidentiality and records. R3 has called for practical RPB guidance on data security, human oversight, quality assurance and disclosure.
An IP can use AI, but the Code requires them to decide whether the output is appropriate for its intended purpose and to supervise the team that uses it. In practice that means checking AI drafts against the books and records and recording the review, because the office holder remains responsible.
The bond secures the proper performance of the IP's functions for each appointment and is not a substitute for PI. Whether a particular loss falls under the bond, the PI policy or both depends on the facts and the wordings. The IPA also warns that failing to maintain PII may invalidate the bond.
Often a civil liability wording responds to a negligence claim regardless of whether a tool was involved, subject to its terms, exclusions and excess. R3 found some practitioners are unsure, so it is worth asking your broker to check the wording and any technology or data exclusions before relying on it.
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.
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