Offered an 18-month PI policy? What the longer term really does for your firm

If your firm’s professional indemnity renewal has come back this autumn with the option of an 18-month policy rather than the usual twelve, you are seeing one of the clearest signs of how far the market has turned. For most of the years since 2019 insurers were shortening their commitments, not lengthening them. Now, in a market awash with capacity, some are happy to tie a good risk in for 18 months at a time. The clearest place to watch it is the solicitors’ market, where longer terms have become common at the recent renewals, but the same offer is appearing for accountants, surveyors, consultants and other professional firms whose insurers want to hold onto the business.

A longer policy is neither a trap nor a free lunch. It is a genuine trade-off, and the right answer depends on your firm’s size, its exposure and its plans. The mistake is to treat the extra six months as an administrative convenience and sign without doing the arithmetic a finance director would apply to any other 18-month commitment.

Why insurers are offering 18 months again

Longer policy periods are a soft-market symptom. When capacity is scarce and rates are rising, insurers want the freedom to re-price every twelve months; when capacity is abundant and they are competing hard for business, a longer term is a way to secure a premium they are pleased to have and to keep a desirable firm off the market for an extra renewal. At the 1 October 2026 solicitors’ renewal, premium rates continued to fall, reductions in the region of 10 per cent were commonly reported for many firms, and the roster of insurers qualified to write solicitors’ PI stood at a record high — more than double the number in the hard market of 2019. That is exactly the environment in which 18-month deals reappear. It is worth seeing the offer for what it is: evidence that the insurer values your business, and a signal of where the broader market sits. (For the wider picture, see our note on renewal strategy in a soft market.)

The upside: locking in falling terms

The case for taking the longer term is straightforward and, in the current market, quite strong. Rates have been falling, but no one expects them to fall forever. An 18-month policy fixes today’s price and today’s wording for a year and a half, so if the market turns — as markets always eventually do — you are insulated from the first stage of a correction. You also remove a whole renewal cycle: one less round of proposal forms, one less negotiation, one less window in which an insurer can impose a new exclusion or push the price. For a larger firm whose renewal consumes real management time and broking cost, that saving is not trivial.

There can be a pricing advantage too, but it has to be checked rather than assumed. An 18-month premium is not automatically good value simply because it feels like a longer deal; the only honest comparison is the cost per month against what twelve months would cost at today’s rates, allowing for the reductions still coming through. Sometimes the longer term is priced keenly to win the commitment. Sometimes it is not. Your broker should set the two out side by side.

The catch most firms miss: one limit, 18 months of exposure

Here is the point that gets lost when a longer term is treated as a convenience. Your limit of indemnity, and in particular any aggregate limit, applies across the whole period of insurance. Stretch that period from twelve months to eighteen and the same pot of cover now has to answer a longer run of claims before it renews and — on most wordings — any aggregate resets. A firm that would see, on average, a certain level of claims activity across a year is now asking one limit to carry eighteen months of it.

For a smaller practice with a single generous limit this rarely matters. For a larger firm, or one whose cover is built as a tower of primary and excess layers, it is a real question to put to your broker before you agree the term. Is the limit expressed per claim, in the aggregate, or both? Does it reinstate during the period, and if so on what terms? And when related claims are treated as one — the mechanics of aggregation — how does that play out over a longer window in which more matters can become linked? None of this is a reason to refuse an 18-month policy. It is a reason to model the longer period deliberately rather than carry a twelve-month assumption into an eighteen-month commitment.

Fair presentation happens once — and now covers 18 months

Under the Insurance Act 2015 you owe your insurer a duty to make a fair presentation of the risk. On a twelve-month policy you do that at inception and again, in effect, at each renewal twelve months later. On an 18-month policy the gap between those formal presentations is half as long again. That matters, because it puts more weight on what you tell your insurer during the term. An acquisition, a significant new service line, a large new client in an unfamiliar sector, or a circumstance that might give rise to a claim are all things an insurer expects to hear about when they happen — not banked for a renewal that is now eighteen months away.

So a longer term raises, rather than lowers, the importance of a disciplined mid-term process: knowing what counts as a material change, and telling the insurer promptly when one occurs. The same logic applies to notifying circumstances early and in the right form. A claims-made policy only helps you if the notification is made correctly and in time, and a longer policy simply means a longer stretch in which that discipline has to hold.

Where your renewal date lands — and whether the tower moves with it

An 18-month term does something quietly structural: it moves your renewal date by six months, and keeps moving it with each longer term you take. For firms used to the common 1 October and 1 April solicitors’ renewal dates, that can shift a renewal into a part of the year that suits the firm less well, or push it out of step with the rest of the market. It can also pull the primary layer out of alignment with the excess layers above it, if those were placed to renew on the same date. Managing a tower whose layers renew at different points is possible, but it is more work and it can create short gaps or overlaps that need watching.

Before agreeing the longer term, it is worth asking three concrete questions. Where will the new renewal date fall, and is that a good or bad time of year for your firm to be in the market? Will the excess layers move to the same date, or will the programme now renew in pieces? And does the new date sit sensibly alongside your own reporting and regulatory cycles? These are easy to settle in advance and awkward to unpick later.

The flexibility you give up

The flip side of locking in good terms is that you are locked in. If the market softens further over the next year, a firm on a twelve-month policy can go back out and capture the improvement at its next renewal; a firm eighteen months into a committed term cannot, at least not without a mid-term re-marketing that insurers are not obliged to entertain. In practice a good broker can still negotiate mid-term improvements in a competitive market — larger firms have been securing lower excesses and enhanced wordings even without going fully back to market — but that is a negotiation, not a right.

The longer term also interacts with your plans. If a sale, merger or succession is on the horizon, or if partners are approaching retirement and run-off cover will come into play, the policy period and its expiry date are part of that planning. An 18-month term that expires at an inconvenient moment in a deal timetable can complicate matters that a twelve-month cycle would have kept simple. None of these is a reason to decline the longer term, but each is a reason to make the decision with the firm’s eighteen-month horizon in view, not just the renewal in front of you.

What the board should actually decide

Stripped of the insurance jargon, the 18-month question comes down to a handful of points a finance director or managing partner can own. Is the longer term genuinely better value on a cost-per-month basis than twelve months at today’s falling rates? Is the limit — especially any aggregate — still comfortable when it has to carry eighteen months of exposure rather than twelve, and does it reinstate? Where does the new renewal date fall, and does the whole programme, including the excess tower, move with it or renew in pieces? Do we have a reliable process for telling the insurer about material changes and circumstances during a longer term? And does an eighteen-month commitment fit any sale, merger, succession or run-off plans we already have?

Answer those, and an 18-month policy can be a sensible way to bank the benefit of a soft market for longer. Sign without answering them, and you may find you have locked in not just a good price but a mismatched renewal date, an over-stretched limit and a review cycle that no longer fits the firm. The longer term is a good option well used; it is simply not a decision to make on autopilot.

Frequently asked

Is an 18-month policy simply 50 per cent more premium for 50 per cent more time?
Not necessarily, and that is exactly what to check. Sometimes the longer term is priced keenly to win your commitment, so the cost per month works out below twelve months at today’s rates; sometimes it is close to proportional, in which case the value lies in locking in terms and removing a renewal rather than in the headline price. The only honest comparison is cost per month, like for like, with your broker setting the twelve- and eighteen-month options side by side.

We are a solicitors’ firm on the SRA Minimum Terms — can our policy even run for 18 months?
The solicitors’ market is where these longer terms are most visible this renewal season, so insurers are placing 18-month solicitors’ policies and the compulsory minimum wording continues to apply throughout the period your insurer sets. The detail that matters — how the limit and any aggregate operate over the longer term, and where the new renewal date falls — is worth confirming with your broker for your specific policy rather than assuming it mirrors a twelve-month arrangement.

Does a longer policy weaken our cover?
Not in itself; the cover is the cover for as long as it runs. The real risk is complacency. A longer term means a longer gap before the next full review of your risk and your limit, and it asks a single aggregate to stretch over eighteen months of potential claims. Keep a disciplined mid-term process for notifying changes and circumstances, and model the limit over the longer window, and a longer policy need not weaken anything.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This article is general information, not advice on a specific policy.