PI coinsurance is an arrangement in which two or more insurers participate on the same professional indemnity policy in agreed percentages, sharing both the premium and any loss in those proportions. One insurer is designated the lead and runs the claims handling for the others. It is the standard placement structure for larger or more complex UK PI risks.
What PI coinsurance means
Coinsurance describes a horizontal sharing arrangement: a single layer of cover is divided between participating insurers, each of which takes a stated percentage of the risk and the premium. It is distinct from reinsurance (where one insurer cedes part of its risk to another behind the scenes) — coinsurance is visible on the placement and each participating insurer is a direct contracting party with the insured firm.
In UK PI market usage, “coinsurance” and “quota share” are largely interchangeable. Some practitioners reserve “quota share” for the more formal Lloyd’s-style slip placement with defined lead and follower thresholds, and use “coinsurance” loosely to describe any multi-insurer participation. Others use the words as synonyms. The substance is the same: percentages of the same layer, several liability for each insurer, and one administrative interface for the firm.
The contrasting structures are a single-insurer placement (one insurer takes the whole layer) and a layered tower (insurers stacked vertically above one another, each attaching only when the layer below is exhausted). Coinsurance sits horizontally within a layer; a tower goes vertically across layers; the two structures combine routinely in larger UK PI placements.
How PI coinsurance works in practice
A coinsurance placement runs through the same three stages as any subscription market: placement, premium and claims.
Placement. The broker assembles enough lines to make up 100% of the layer. Each insurer initials a slip (in the London market) or signs a participation schedule (in the company market) stating its percentage and its terms. The slip identifies a lead insurer, usually the largest or most experienced PI underwriter on the line, and confirms which claims agreement wording governs.
Premium. Premium is apportioned in the same percentages as the risk. Each insurer is paid its share through the broker’s bordereau or premium accounting process. Insurance premium tax and brokerage are apportioned likewise.
Claims. The lead insurer handles the claim day-to-day: instructing solicitors, corresponding with the firm, reserving the file and recommending settlement. The follow markets are bound by the lead’s decisions up to thresholds set out in the claims agreement clause. Above those thresholds — commonly any settlement above a stated cash figure, or any matter raising a coverage question — follower agreement is required. The lead obtains that agreement; the firm rarely sees the process.
A key feature is that each insurer’s liability is several and not joint. If one participant becomes insolvent, the others are not responsible for that participant’s share. The firm bears the credit risk of each insurer on the slip.
Worked example
A 60-partner UK consulting engineering firm with £30m of fee income arranges a £10m primary PI layer on coinsurance terms with three participants:
- Lead insurer: 50% — £5m of every loss, £125,000 of the £250,000 layer premium
- Insurer two: 30% — £3m of every loss, £75,000 of premium
- Insurer three: 20% — £2m of every loss, £50,000 of premium
A claim is notified following a structural advice dispute. After defence, the claim settles for £4m with £600,000 of defence costs paid inside the limit. The £4.6m total is apportioned:
- Lead: 50% × £4.6m = £2.3m
- Insurer two: 30% × £4.6m = £1.38m
- Insurer three: 20% × £4.6m = £920,000
The firm’s £100,000 excess applies once. The firm receives a single payment of £4.5m (£4.6m less excess), with the three insurers settling their shares internally through the slip’s accounting process.
A second claim later in the year for £1.2m is paid in the same proportions. Because the layer is each-and-every (as is normal in the regulated professions and for risks of this size), the per-claim limit remains £10m on every separate matter.
When PI coinsurance matters most
Coinsurance becomes the default placement structure in three situations.
Risks above single-insurer appetite. UK PI insurers cap their individual lines at stated maxima — often £2m to £10m for a single line, depending on profession and class. Firms needing £10m, £25m or £50m of cover routinely require multiple insurers on one or more layers, and coinsurance is how that is done within a layer.
Difficult or specialised risks. Firms with a recent claims history, unusual specialisms (international work, contentious construction advice, complex tax planning) or large balance-sheet exposures sometimes find no single insurer willing to take the whole line at an acceptable price. Spreading the risk between several insurers can re-open a placement that would otherwise fail at a single insurer’s underwriting committee.
Schemes and broker facilities. Industry mutuals and broker-led schemes often run on a coinsurance basis with a panel of insurers, each taking a fixed share of the book. The insured firm sees a single policy and one set of terms; behind that, the risk is shared across the panel.
Common variations and market wording
UK and London market wordings describe coinsurance arrangements in a variety of ways:
- “Subscription market policy with the following participating insurers.” Names each insurer and its line; the standard Lloyd’s-style placement.
- “Coinsurance schedule.” A schedule appended to the policy listing each insurer’s percentage and the lead.
- “Lead and follow markets.” Identifies the lead carrying claims authority and the followers bound by the lead’s decisions, with consent thresholds.
- “Several and not joint.” Each insurer is liable only for its own share; insolvency of one does not transfer to the others.
- “LMA 5096” / “LMA 5125” / “Joint Excess Loss claims agreement.” Lloyd’s Market Association claims agreement wordings, governing how lead authority is allocated and when follower consent is required.
- “Single set of terms applies to all participating insurers.” Ensures the wording is identical across the layer, with no insurer carrying narrower terms than another on the same line.
The policy schedule, slip and claims agreement clause together govern. A broker placement summary is not a substitute for reading them.
Related concepts
- PI quota share arrangement — overlapping concept used largely synonymously in UK PI.
- PI tower program — vertical stacking of layers above the primary.
- Following form excess layers — how excess layers track the primary wording.
- Contribution rights between insurers — when one insurer can claim contribution from another.
- Solicitors’ PI sector page — typical use of coinsurance in larger solicitors’ placements.
Frequently asked questions
Is PI coinsurance the same as quota share?
In UK market practice, the two terms are used largely interchangeably. Some practitioners distinguish formal Lloyd’s-style quota share placements from looser company-market coinsurance, but the structural substance is the same: horizontal sharing of a layer between insurers in agreed percentages with several liability.
Who handles claims when there are several insurers?
The lead insurer handles the claim day-to-day. Follow markets are bound by the lead’s decisions under the claims agreement clause up to defined thresholds and consulted above them. The firm normally deals with one claims handler appointed by or for the lead.
What is a claims agreement clause?
A clause in the policy or slip that sets out how authority to handle and settle claims is allocated between the lead and followers. Common Lloyd’s market clauses include the LMA 5096 series and the Joint Excess Loss claims clauses. The clause defines the cash and coverage thresholds above which the lead must obtain follower agreement.
Can a follower disagree with the lead’s settlement decision?
Within the thresholds defined by the claims agreement clause, the followers are bound by the lead. Above the thresholds, followers must agree before a settlement is concluded. Disagreement is rare in well-run placements because the lead consults followers early, but where it occurs the policy or slip sets out the resolution process.
What happens if a participating insurer becomes insolvent?
Each insurer is severally liable for its own share only. The other participants are not responsible for an insolvent insurer’s share. The firm bears the gap unless an alternative recovery, such as the Financial Services Compensation Scheme where applicable, can be made.
Does coinsurance affect SRA or ARB compliance?
No, provided each participating insurer on the primary layer is bound by the regulator’s minimum terms (SRA minimum terms and conditions for solicitors, ARB published criteria for architects). The minimum protection is delivered by the slip as a whole, not by any single participant.
Is coinsurance more expensive than single-insurer cover?
Not inherently. On competitive risks the sum of the participants’ rates is often lower than a single insurer’s price for the whole line. On harder risks the position can reverse. Pricing depends on market appetite and the risk profile, not on the placement structure alone.
How are claim payments made to the insured firm?
In most coinsurance placements the firm receives a single payment, with each participating insurer settling its share into a common payment account run by the broker or the lead. The administrative complexity is absorbed behind the scenes.
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About Apex Insurance Brokers Ltd
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.