ICAEW · Bye-law 61
ICAEW PII — the 2.5× aggregate limit formula
Reviewed by Apex Insurance Brokers · Published 15 July 2026
ICAEW Bye-law 61 requires firms to hold PI cover equal to 2.5 times gross fee income, subject to a £1.5m minimum and a £25m maximum. Here's how the calculation actually works.
The formula
The Bye-law: minimum aggregate limit = 2.5 × annual gross fee income
Floor: £1.5m (regardless of how small the practice)
Cap: £25m (no requirement to place above this via Bye-law)
Aggregate basis: this is the annual aggregate limit, not per claim.
Worked examples
- £400k firm: 2.5× = £1m. Bye-law requires £1.5m (floor applies).
- £800k firm: 2.5× = £2m. Bye-law requires £2m.
- £2m firm: 2.5× = £5m. Bye-law requires £5m.
- £8m firm: 2.5× = £20m. Bye-law requires £20m.
- £12m firm: 2.5× = £30m. Bye-law requires £25m (cap applies).
Edge cases the formula doesn't handle well
- Sudden fee-income growth: cover based on last year's fees may be too low.
- One-off high-fee assignments: aggregate risk not proportional to steady-state.
- Audit registration: often justifies limits materially above Bye-law minimum.
- Insolvency work: separate consideration required.
- Tax advisory (BADR, EIS, R&D): higher aggregate exposure warranted.
Practical placement points
Firms usually place cover materially above Bye-law minimum — the formula is a floor.
Insurers price on turnover, mix of work, claim history and territorial exposure — not just the Bye-law figure.
Aggregate reinstatements available at cost for firms with high single-claim exposure.
Frequently asked
Does ACCA use the same formula?
ACCA requires similar cover levels — broadly 2.5× fees — but consult the ACCA regulations for the exact requirement.
What is 'gross fee income'?
Annual fees invoiced by the firm, before any deductions for costs, VAT or subcontractors.
Are we required to place at the cap?
No. £25m is the maximum Bye-law figure. Firms can place higher voluntarily — and often do.
What about ICAEW audit-registered firms?
The Bye-law minimum still applies, but audit-registered firms typically carry much higher limits given the specific claim exposure.
What happens if fee income spikes mid-year?
Reasonable practice is to review cover with the broker at the point of the change — the Bye-law calculation is based on the current relevant period.
Does this replace insurers' underwriting?
No. Insurers underwrite independently; the Bye-law is a compliance minimum, not a market limit.
Related
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