Category: Insurance definitions · Reviewed by Taylor Watts, Broker · New Business · Last reviewed May 2026
A PI quota share arrangement is a structure in which two or more insurers each take a fixed percentage of the same layer of professional indemnity cover, sharing both the premium and any loss in the same proportions. It is one of the standard ways large or unusual UK PI risks are placed when no single insurer is willing — or commercially able — to write the whole layer alone.
In a quota share placement, a single layer of cover — for example the primary £5m of indemnity — is divided horizontally between participating insurers. Each insurer signs on for a stated percentage. If Insurer A takes 50%, Insurer B takes 30% and Insurer C takes 20%, then on every claim that hits that layer, Insurer A pays half, Insurer B pays just under a third, and Insurer C pays a fifth — up to the layer limit. The same percentages apply to the premium.
The arrangement is documented on one policy with multiple participating insurers, or on parallel policies on identical terms, depending on whether the placement is on a single Lloyd’s-style slip or arranged through the company market. In the Lloyd’s and London company market the slip is the common mechanism; each insurer initials its line on the slip and is bound to its stated percentage.
A quota share differs from a layered tower (where insurers sit one above another vertically, each attaching only when the layer below is exhausted) and from a pure coinsurance arrangement in name only — the two terms overlap heavily in UK usage and are sometimes used interchangeably. The technical point in either case is the same: horizontal sharing on one layer, with each insurer liable severally for its own share and not for the shortfall of any co-insurer.
The mechanics of a quota share placement run through three stages: placement, premium collection, and claims handling.
Placement. The broker prepares a market submission and approaches several insurers willing to participate. Each insurer indicates a percentage line and a price. The broker assembles enough lines to reach 100% of the layer. A lead insurer is identified — usually the largest line or the most experienced PI underwriter on the slip — and the other participants are followers.
Premium. Premium is allocated in the same percentages as the risk. If the total premium for the layer is £75,000 and Insurer A has a 50% line, Insurer A receives £37,500. Brokerage and any insurance premium tax are similarly apportioned.
Claims. When a claim is notified, the lead insurer typically takes the day-to-day claims-handling role, instructing solicitors and corresponding with the firm. The followers are kept informed and are bound by the lead’s decisions on settlement and defence up to defined thresholds, set out in the claims agreement clause (in Lloyd’s market terms commonly the LMA 5096 series or the Joint Excess Loss claims clauses, depending on the placement). Above those thresholds, follower agreement is required for settlement.
Each insurer pays its percentage of any loss directly. If Insurer C becomes insolvent, the firm cannot ask Insurer A or B to make up Insurer C’s 20% share — the obligation is several, not joint. This is the principal credit-risk feature of a quota share and one of the reasons UK brokers monitor the financial strength of every participating insurer.
Consider a mid-sized UK solicitors’ firm with 20 partners and £8m of fee income. Its primary PI requirement is £3m on each-and-every-claim terms under the SRA minimum terms and conditions. The firm has had a notification history that single insurers find unattractive at a price the firm will pay, so the broker arranges a quota share on the primary £3m layer:
The premium for the primary layer is £180,000. It is allocated £72,000 to X, £63,000 to Y, and £45,000 to Z.
A £2m claim settles. X pays £800,000, Y pays £700,000, Z pays £500,000. The firm’s £25,000 excess applies once. Defence costs of £250,000 paid inside the limit are apportioned in the same percentages: X £100,000, Y £87,500, Z £62,500.
If a second £1.5m claim settles later in the same year, the per-claim limit is undamaged (the layer is each-and-every) and the same percentage split applies again. If the firm also has excess layers of £2m above £3m, those layers respond only when the primary £3m is exhausted on a single claim, and are governed by their own placement structure — which may itself be quota share, single-insurer, or further layered.
Quota share placements come up in three situations more than any others.
Larger firms above the single-insurer appetite. Many UK PI insurers cap their individual line at a stated maximum — often between £2m and £10m on a single risk, depending on profession, size and class. A firm needing £20m of cover may need several insurers in horizontal share within each layer, even before any vertical stacking.
Difficult or non-standard risks. Firms with a recent claims history, unusual specialisms, or exposure to overseas work sometimes find no single insurer willing to take the whole layer at any price the firm finds acceptable. A quota share spreads the risk and the credit decision across more underwriters, which can re-open a placement that would otherwise fail.
Mutual or scheme-style placements. Some industry schemes and broker facilities are structured as quota shares, with a panel of insurers each taking a fixed share of the book. The insured firm experiences the placement as a single policy, but the underlying risk is shared on a quota share basis between the panel members.
Quota share placements appear under a range of labels in UK wordings and slip documents. The substance is what matters:
The slip and policy schedule together govern. Brokers’ summary documents are not a substitute for reading the participating insurer percentages and the claims agreement clause.
Is a quota share the same as coinsurance?
In UK PI market usage, the two terms are used almost interchangeably. Both refer to horizontal sharing of one layer between multiple insurers in agreed percentages. Some practitioners reserve “quota share” for placements with a formal slip and a defined lead, and “coinsurance” for any multi-insurer participation; others use the words synonymously. The contractual substance is what governs, not the label.
How is the firm affected day-to-day by a quota share?
In most placements the firm deals with one broker and one lead claims handler. The administrative complexity is absorbed by the broker and the lead insurer. The firm should know who its lead is, how follower agreement is obtained on larger settlements, and whether any participant has a different financial strength rating that affects the credit profile of the placement.
What happens if one participating insurer becomes insolvent?
Each insurer is severally liable for its own percentage. If Insurer C, holding a 20% line, becomes insolvent, that 20% of any loss is not recoverable from Insurers A and B. The firm bears the gap unless an alternative recovery is available (for example through the Financial Services Compensation Scheme where the policy qualifies). This is the principal reason brokers monitor each insurer’s financial strength, not just the lead’s.
Does each insurer have its own claims handler?
The lead insurer normally runs the claim, with reporting to the followers under the claims agreement clause. The firm typically receives a single point of contact rather than three. On large or contentious settlements, follower agreement may be required and obtained by the lead’s claims handler. The firm’s broker can identify who is doing what at the start of a notification.
Can excess layers also be on a quota share basis?
Yes. Excess layers can themselves be placed as quota shares between multiple participating insurers. A typical large firm tower might be a quota-share primary of £3m, a single-insurer first excess of £2m, and a quota-share second excess of £5m. The structure is set out on the placement summary and on each layer’s schedule.
Is quota share more expensive than a single-insurer placement?
Not inherently. The total premium for a quota share is the sum of each insurer’s share at its own rate; in a competitive market this often comes in below the price a single insurer would charge to take the whole risk, because each participant is exposed to a smaller line. On harder placements the position can reverse. Pricing depends on the market and the risk, not on the structure alone.
How is the SRA minimum terms compliance affected?
The SRA’s minimum terms and conditions for solicitors’ PI bind each participating insurer to the same minimum wording on the primary layer. Each insurer’s share is on MTC terms; the firm’s protection on the primary layer is at least the minimum the SRA requires. Excess layers above the primary are not bound by MTC and may have narrower wording, regardless of whether they are quota share or not.
Who issues the claim payment to me?
In a Lloyd’s-market quota share, the payment is usually issued by the lead insurer or by the broker’s claims team on behalf of all participants, with each insurer settling its share into a single payment account. The firm receives a single payment. Behind the scenes, each insurer settles its percentage internally. The mechanics are invisible to the firm in well-run placements.
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Apex Insurance Brokers Ltd is a Bristol-based insurance broker authorised and regulated by the Financial Conduct Authority (firm reference number 724952). The company is registered in England and Wales under Companies House number 07014570. Contact: info@apexinsurancebrokers.co.uk | 0117 325 0027.
Last reviewed: May 2026 by Apex Insurance Brokers Ltd.
Important: this article is general information, not advice on your specific circumstances. For advice on PI insurance for your firm, contact us on 0117 325 0027 or info@apexinsurancebrokers.co.uk.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email info@apexinsurancebrokers.co.uk, or request a quotation.
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