PI insurance with adverse claims history — the multi-claim playbook

A single prior claim tests the market. A pattern of claims — or a heavy loss ratio — requires a different placement approach. The firm needs a credible remediation narrative, a structured presentation, and a broker willing to go beyond the obvious insurers.

What underwriters see in an adverse history

Individual claims tell an underwriter little. Loss ratio — the total incurred cost of claims as a percentage of premium paid over the review period — is the number that drives capacity decisions.

A loss ratio above 100% over three or five years signals to an insurer that the firm has cost them more than it paid. Continuing on the same terms is uneconomic. Terms change — higher excess, restricted cover, higher premium — or the insurer exits.

The three questions the market asks

1. Is the pattern systemic? Similar errors across multiple matters point to process weakness. A mix of unrelated one-offs is easier to defend.
2. Has remediation happened? Named people, dated changes, evidence of new supervision, audit or file-review processes.
3. Has the risk profile actually changed? If the underlying practice is the same, the underwriting response is the same.

Restructuring the account

1. Named exclusions. Discontinued areas of practice can be excluded going forward. Reduce ongoing capacity requirements.
2. Higher excess. Firm carries more of the small-frequency loss; insurer prices for the larger tail.
3. Aggregate management. Lower aggregate at inception with buy-up option, sub-limits on specific high-frequency triggers.
4. Layered programme. Primary insurer (perhaps mainstream company market at reduced limit) plus excess (Lloyd's syndicate or specialist company).
5. Scheme vs open-market split. Where a scheme (SRA Qualifying Insurers, LSS Master Policy) applies, that is the floor. Any additional cover sits above.

The remediation narrative

The best-priced adverse-history placement is one where the firm can present a specific, dated story of what changed. Vague ‘we've improved supervision’ language is discounted.

1. What was the root cause? Named process failure, personnel issue, technology gap, workload spike.
2. What specific change was made and when? New supervision protocol, new checking process, new IT system, personnel change, external audit engagement.
3. What evidence exists that the change is embedded? File review results, complaint volume trend, notification volume trend, audit reports.
4. What is the firm doing to prevent recurrence?

Working with the incumbent vs re-marketing

The incumbent knows the account and may offer a renewal with reset terms. The wider market may offer better terms or worse — the only way to know is to test.

1. Where the incumbent's response is workable and the client wants continuity, accept it and document the fair-value assessment.
2. Where the incumbent's response is uncompetitive or the client wants alternatives, remarket with a full specialist-broker presentation.
3. Where the incumbent is exiting the class, remarketing is the only option and time is short.

Regulatory expectations

Regulators expect firms to maintain adequate PI. A pattern of claims may itself become a regulatory matter regardless of insurance status.

1. SRA — qualifying insurer must be maintained; pattern of claims may trigger supervisory engagement.
2. ARB — adequate PII standard; ARB Standard 8.
3. ICAEW / ACCA / other DPB — DPB rulebook standards.
4. FCA-authorised firms — own-PII under MIPRU 3; SUP 15 notification of material matters; SMCR fitness-and-propriety implications.

Frequently asked

Related reading

• PI insurance with prior claims — single-claim guidance
• PI insurance after declinature — recovery route
• Notification vs claim — the practical distinction
• Fair presentation under the Insurance Act 2015