Category: Insurance definitions · Reviewed by Taylor Watts, Broker · New Business · Last reviewed May 2026
A mid-term adjustment (MTA) is a change to a PI policy after it has incepted but before its annual renewal. MTAs typically reflect a change in the insured’s business — new activities, growth in fee income, acquisitions, new partners, expanded territory, increased limit, additional extensions — and produce an endorsement, an additional premium (or return premium) calculated pro rata, and a revised schedule.
PI policies run for twelve months. Within that twelve months the policy schedule is fixed unless the parties agree to vary it. An MTA is the mechanism by which the schedule is varied. The variation is documented by an endorsement issued by the insurer through the broker, signed and dated, and forms part of the policy with effect from the date stated on it.
Common MTA triggers, from most frequent to least:
Some MTAs require nothing more than information disclosure to the insurer — the insurer records the change with no premium adjustment because it has no underwriting impact. Most material MTAs produce an additional premium (AP) calculated for the unexpired portion of the policy. A reduction in exposure can in principle produce a return premium (RP), although insurers are slower to refund than to charge.
The MTA process is also the route by which an insurer agrees to amend cover at the insured’s request — adding a sector page, increasing a sub-limit, removing an exclusion. These are negotiated changes; the insurer is not obliged to agree.
The mechanics differ by broker and insurer but the typical sequence is:
Step 1 — change identified. The insured notifies the broker of the change. For fee income, this often surfaces at quarterly management accounts. For activity changes, ideally before the new activity goes live.
Step 2 — disclosure to insurer. The broker prepares an MTA submission summarising the change and any new underwriting information. Under the Insurance Act 2015 and the consumer / non-consumer disclosure regimes, the insured’s duty of fair presentation continues throughout the policy year for matters that materially affect the risk; the MTA is the route by which mid-term disclosures are documented.
Step 3 — insurer assessment. The insurer assesses the change. For routine changes (small fee income uplift, minor activity addition), the response is usually quick. For larger changes (significant activity addition, M&A, limit increase), the underwriter may ask for further information or require a referral.
Step 4 — terms offered. The insurer either agrees the change at no AP, agrees at an AP calculated pro rata to the unexpired policy term, declines, or agrees subject to revised terms (new exclusion, increased excess, capped sub-limit on the new activity).
Step 5 — endorsement and schedule. Once agreed, an endorsement and revised schedule are issued. The endorsement records the effective date, the change, the AP or RP, and any consequential amendments to wording.
Step 6 — cover in force. The new cover takes effect from the endorsement date (or the back-dated date stated on the endorsement, where the insurer has agreed to backdate to align with the actual change in the business).
A key point: cover for the new activity or new exposure does not exist until the endorsement is in place. A firm that starts a new service line in month four of the policy without an MTA is uninsured for that service line until the change is notified and accepted, and possibly retrospectively as well.
A Bristol-based accountancy practice with £380,000 of fee income, a £1m PI policy and a £4,800 annual premium incepted on 1 April. In August (month five), the practice acquires a small tax-investigation specialist for £80,000 of fee income.
The broker prepares an MTA submission to the insurer. The submission discloses the acquisition, the additional fee income, the activity profile of the acquired practice (representation in HMRC enquiries), and confirms that the acquired practice has been continuously insured with no claims for the past six years and that retroactive cover has been arranged with the previous insurer for legacy work.
The insurer accepts the change. The AP calculation is based on the activity uplift and the eight months remaining on the policy. The annualised AP for the additional £80,000 of fee income is £900; pro-rata for eight months it is £600. The schedule is reissued with combined fee income of £460,000, the activity profile updated to include tax investigation representation, and a confirmatory note about the legacy retroactive cover arranged separately for pre-acquisition work.
The premium for the next policy year, on full annualisation, will reflect the combined fee income and activity mix.
A different example: in November (month eight), the same firm decides it wants to increase its limit from £1m to £2m. The broker arranges the MTA. The AP for doubling the limit for the four remaining months might be £600 to £900, depending on insurer pricing. The schedule is reissued with the new limit. Pre-MTA claims are not affected by the limit uplift — the limit applies to claims notified after the endorsement date, on the basis that claims-made cover responds to the limit in force when the claim is notified.
MTAs matter most for firms whose risk profile changes meaningfully during a policy year. The most common situations:
Growth-stage firms. Fee income that materially exceeds the disclosed figure at inception requires an MTA. Many policies have a tolerance clause (often around 10 to 15 per cent) below which an automatic MTA is not required, but a substantial uplift triggers disclosure.
M&A. Acquisitions and mergers are MTA events. The acquired practice’s historic exposure typically needs separate run-off arrangement with the previous insurer; the going-forward exposure is added to the acquiring practice’s policy via MTA. Failure to handle the structure properly can leave gaps. See the dedicated guidance on practice merger and sale for sector-specific detail.
New activities and new sectors. A consultancy that adds an expert witness practice; an architect that takes on principal designer duties under CDM; an IFA that extends into discretionary management — each is an MTA event because the activity profile is part of the underwriting.
Limit increases. Where a contract or a regulatory requirement requires a higher limit than the policy currently provides, an MTA can lift the limit. The AP is usually meaningful because of the additional capital the insurer is committing.
Regulatory developments. Where a regulator notifies a firm that supervisory action is opening or that a fine is in prospect, this can be a notifiable change of circumstance to the insurer even if no claim has yet been made. Whether it is an MTA or simply a notification under the policy depends on the wording.
Disposal or downsizing. Where the firm has shed a service line or closed an office, an RP-bearing MTA may be available. The insurer is not obliged to refund except where the wording provides for it; most agree to a pro-rata refund less administration charge.
AP calculation method. Most insurers calculate AP pro rata to the unexpired policy term. Some apply a short-period scale (more than pro rata) where the change is made very late in the policy year. The contractual basis is in the policy.
Tolerance clauses. Many policies include a tolerance — typically 10 to 15 per cent — within which fee income overrun does not require an MTA and is settled at renewal by an adjustment premium. Above the tolerance, the MTA is required.
Automatic uplift clauses. Some wordings include automatic cover for newly acquired businesses up to a defined size for a defined period, after which an MTA is required. The triggering definition and the maximum size vary.
Insurer right to decline. The insurer’s right to decline an MTA is not absolute but is practically unconstrained where the change materially worsens the risk. A declined MTA leaves the insured with the choice of foregoing the change, accepting whatever terms are offered, or arranging the additional cover elsewhere (which creates layering and aggregation complexity).
Endorsement effective date. The endorsement effective date is normally the date of the actual change in the business, not the date the endorsement is signed. Backdating requires insurer agreement. Where there is a delay between the business change and the MTA submission, ensure the broker requests backdating.
Disclosure duty continuity. The duty of fair presentation under the Insurance Act 2015 applies at inception, at MTA, and at renewal. Material non-disclosure at MTA can prejudice cover for claims arising from the change.
What triggers a mid-term adjustment on a PI policy?
Common triggers include material fee income uplift, a new professional activity, an acquisition or merger, a new partner or director, expansion into a new territory, a request to change the limit of indemnity, a request to add or amend an extension, and any change to the legal entity. Any change that materially affects the risk underwritten at inception triggers a disclosure duty under the Insurance Act 2015, even if the insurer chooses not to charge an additional premium.
How is the additional premium calculated?
Most insurers calculate the additional premium pro rata to the unexpired term of the policy. A change made halfway through the year that produces a £1,000 annualised premium impact would typically be billed at £500 for the remaining six months. Some insurers apply a short-period scale where the change is very late in the year, and most charge a small administration fee on top.
Can the insurer refuse an MTA?
Yes. The insurer is not obliged to extend cover to a materially worsened risk on the existing terms. An insurer can decline, offer terms (additional exclusion, higher excess, sub-limit on the new activity), or accept at an AP. Where the insurer declines, the insured can forego the change, accept the offered terms, or arrange parallel cover elsewhere — which produces layering and aggregation complexity.
Do I need an MTA for a small fee income uplift?
Most policies have a tolerance clause — often 10 to 15 per cent — within which fee income overrun does not require a mid-term endorsement. Above the tolerance the MTA is required. The actual figure is settled in the renewal adjustment. The tolerance does not apply to changes in activity or limit — those require an MTA regardless of size.
What happens if I forget to declare a mid-term change?
Under the Insurance Act 2015, the duty of fair presentation applies throughout the policy year for material changes. A material non-disclosure can entitle the insurer to avoid the policy (where deliberate or reckless) or to reduce a claim payment proportionally (where careless). The practical advice is to disclose materially everything mid-term that you would have disclosed at inception had it been known then.
Can I get a refund if my business shrinks during the year?
In principle, yes, where the wording provides for return premium and the change is material. Insurers are slower to refund than to charge; most apply administration fees and may scrutinise the change more closely. Where a service line has been wound up or an office closed, the broker should request the RP-bearing endorsement and document the change.
Does an MTA affect existing claims?
No. Claims notified before the MTA endorsement date are dealt with under the policy as it stood at the date of notification. The MTA changes cover going forward from its effective date. Limit increases obtained by MTA apply to claims notified after the endorsement, not to claims already notified, on the basis of how claims-made cover responds.
Is an MTA the same as a notification?
No, they are different. A notification is the route by which the insured tells the insurer about a claim or potential claim. An MTA is the route by which the policy itself is amended. A single event can trigger both — for example, an FCA supervisory letter might be a notification under the claims provisions and might also be a material change that requires an MTA to record. The broker handles the distinction.
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Apex Insurance Brokers Ltd is a Bristol-based UK insurance broker specialising in professional indemnity cover for regulated and non-regulated professional firms. Apex is authorised and regulated by the Financial Conduct Authority, firm reference number 724952, and is registered at Companies House under number 07014570. Contact: info@apexinsurancebrokers.co.uk or 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.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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