Why do professional indemnity premiums increase at renewal?

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

A professional indemnity (PI) premium is not a fixed subscription. It is an insurer’s yearly reassessment of how likely you are to face a claim and how much that claim might cost. When any part of that calculation changes — on your side or across the whole market — the price moves with it. An increase rarely means one thing has gone wrong; more often several small pressures stack up. Understanding which ones apply to you is the first step to controlling them.

1. Your claims and notifications experience

The single biggest lever on a PI premium is your own claims record. PI is almost always written on a claims-made basis, meaning the policy responds to claims first made against you (or circumstances you notify) during the policy year, regardless of when the work was done. Underwriters look back over several years — commonly the last five — at both paid claims and notified circumstances.

A notification matters even where no money is ultimately paid. It signals that the type of work you do can generate disputes, and an insurer prices for that possibility. A single significant claim, or a pattern of smaller ones, can move you from a “clean” risk to one that needs closer underwriting — and that is reflected in the renewal terms, the excess, or both.

2. The insurance market cycle

PI does not exist in a vacuum. The insurance market moves through cycles, often described as hard and soft markets, and this happens independently of anything you do.

In a soft market, plenty of insurers are competing for business, capacity is abundant and premiums are keen. In a hard market, insurers — including syndicates at Lloyd’s of London, a major source of PI capacity — pull back, tighten their appetite, raise rates and apply stricter terms, often after a period of poor claims results across a class of business. When the market hardens, a firm with an unchanged risk and a clean record can still see its premium rise simply because the cost and availability of cover has shifted for everyone.

This is why two similar firms can experience very different renewals in different years, and why your broker’s knowledge of which insurers are actively writing your profession matters so much.

3. Turnover and fee income growth

PI premiums are heavily influenced by the size of your business, most commonly measured by turnover or professional fee income. The logic is straightforward: more work means more exposure. A firm billing more this year than last is, all else equal, creating more opportunities for something to go wrong and more clients who could bring a claim.

Growth is good news for the business but it does feed the premium. If your turnover has jumped — whether through winning larger contracts, expanding the team or taking on bigger clients — expect that to be reflected. This is one of the most common reasons a firm is surprised at renewal: the record is clean, but the business is simply bigger.

4. Changes to the work you actually do

Underwriters price the type of work as much as the volume. Moving into new services, new sectors, higher-value projects or a different client base can change your risk profile materially, even if turnover is flat.

Examples that typically attract attention include taking on larger or more complex projects, advising clients in higher-risk industries, doing more work with an international dimension, or adding a service line that carries a heavier claims history across the profession. Contract terms matter too: agreeing to uncapped liability, onerous collateral warranties or unusually demanding client contracts increases the potential cost of a claim and, with it, the premium.

This is why the proposal form asks for a work split. Being precise about what you do — and updating it honestly each year — helps an insurer price the real risk rather than assuming the worst.

5. Your sector’s risk profile

Even if nothing about your firm changes, the perceived risk of your whole profession can shift. If claims rise across a particular sector — construction, financial advice, technology, legal services and others each go through their own cycles — insurers reprice that sector as a class. Regulatory change, high-profile losses, or emerging areas of exposure (cyber-related liability and, increasingly, questions around the use of AI in professional work) can all reshape how underwriters view an entire category of business.

For regulated professions there is a further layer. Bodies such as the Solicitors Regulation Authority, RICS, the ICAEW and the Architects Registration Board set minimum PI requirements for their members. Where a regulator specifies minimum limits, run-off provisions or particular policy terms, those requirements shape what cover you must buy — and changes to them can affect what you pay.

Firm-specific vs market-wide: which is driving your increase?

Firm-specific drivers are the ones within your influence: your claims and notifications, your turnover, the work you take on, your contract terms and the quality of your risk management. If these are moving, you can often explain or mitigate the increase.

Market-wide drivers — the hard/soft cycle, sector-level claims trends and shifts in insurer appetite — affect you regardless of your own record. You cannot control these, but a broker can help you navigate them by knowing which insurers are competitive for your profession this year. Most real-world renewals are a blend of both, which is why a like-for-like comparison and a clear explanation from your broker is worth having. Ask Apex to break down what’s driving your renewal.

What a firm can do to manage its PI premium

• Present the risk well. A thorough, accurate and early proposal gives underwriters confidence. Under the Insurance Act 2015, commercial policyholders owe a duty to make a fair presentation of the risk — disclosing what you know, or ought to know, in a clear and accessible way. Doing this properly protects your cover and helps you get the best terms.
• Evidence your risk management. Documented procedures, contract review, quality controls, complaints handling and staff training all tell an insurer you take claims prevention seriously.
• Be careful with contract terms. Avoid accepting uncapped liability or onerous warranties where you can. Higher potential liability means higher premium.
• Give accurate figures. Report turnover and your work split precisely rather than rounding up defensively — over-stating exposure costs you money.
• Consider the excess and limit. A higher voluntary excess can reduce premium, and reviewing whether your limit of indemnity (commonly offered as generic options such as £1m, £2m or £5m) still matches your needs and any regulatory minimum is worthwhile.
• Start early and use a broker. Rushed renewals limit your options. Begin four to six weeks out so your broker can approach the market properly.

Common questions

My premium went up even though I had no claims — why?
A clean record is only one factor. Growth in your turnover, changes in the work you do, a hardening insurance market or rising claims across your whole sector can all push the price up independently of your own claims history. It is common for a claim-free firm to still see an increase.

Does making a claim automatically increase my premium?
Not automatically, but it is a significant factor. Underwriters weigh the nature, cause and cost of a claim, along with whether it points to a wider pattern or a one-off. A single incident that has been well handled and addressed carries less weight than repeated notifications of the same type.

Should I reduce my limit of indemnity to save money?
Be cautious. Your limit needs to reflect your actual exposure, your clients’ contractual requirements and any minimum set by your regulator or professional body. Cutting the limit to shave the premium can leave you under-insured and, for regulated firms, potentially in breach. Discuss it with your broker before deciding.

Every firm’s renewal is different, and the right response depends on which of these drivers is actually in play for you. Talk to Apex about your PI renewal and get a clear, jargon-free explanation before you decide.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for reading your policy wording.