The question "how much PI insurance do I need" is not a single-number question. The appropriate professional indemnity limit for a regulated firm sits at the intersection of six inputs: the regulator floor, worst credible severity, contract obligations, aggregation exposure, claims and notification history, and long-tail statutory exposure. This page sets out the framework so a director, partner, or compliance principal can work the sizing decision through with reasoning a regulator or insurer will expect to see if challenged.
Different regulators set floors on different logic — the SRA a fixed minimum, ICAEW a multiple of fee income, RICS a turnover band, ARB an adequacy standard. Comparing a solicitor's £3m any-one-claim floor with an architect's £250k adequacy standard tells you almost nothing about which firm has more exposure.
Fee income is a rough proxy. A £600,000-turnover solicitor doing high-value commercial property has a wildly different severity profile from one doing family and probate. Regulators use fee income as shorthand because they need a rule that scales, not because it predicts claim value.
Contract obligations often drive the limit above the regulator floor. Corporate clients, local authorities, and framework agreements routinely specify £5m or £10m per matter, and those obligations bite once the firm signs.
Severity potential matters more than average outcome. A firm might have averaged £15,000 per claim over ten years, but the sizing question is what the largest single realistic claim could be, not the typical one.
Aggregation exposure can compound multiple engagements into one claim. Where the same alleged error runs through 20 conveyancing plots, 15 tax scheme clients, or a design across a residential block, the aggregation clause can treat that as one claim against one limit.
Start with the statutory or regulator-imposed minimum for your profession. It is the floor beneath which you cannot legally trade — not the answer.
Ask what the largest single claim your firm could realistically face looks like. Model conservatively. Three times your typical single-engagement fee is a starting anchor, not the answer.
The output is a number. Write it down. It anchors the sizing conversation with the insurer.
Client contracts often specify PI limits, sometimes materially above the regulator floor.
If a contract commits the firm to a limit above the regulator floor, the higher number becomes the working figure. Audit signed engagement letters at renewal.
Aggregation is the input most sizing exercises miss. Where your work involves multiple related engagements built on a common act, omission, source, or cause, the aggregation clause in your policy wording can compound multiple potential claims into one. The SRA MTC uses an "any one claim" construction that, on its own facts, generally treats aggregated exposures as a single claim against a single limit. RICS, ARB, and ICAEW approved wordings each carry their own aggregation language and case law overlay.
The sizing question is: what is the worst plausible aggregation scenario your firm can face?
Size against the aggregated exposure in the worst plausible scenario, not the individual engagement value.
Any prior claim above £100,000 should reset your limit thinking. It tells you that your firm has proved capable of producing a mid-six-figure loss, and it tells the insurer the same. Sizing at floor after such a claim is difficult to defend.
Any open notification should be assumed to consume the limit for the policy period in which it was notified. Under claims-made-and-notified cover, the limit that responds is generally the limit in force at the point of notification, and the eroded portion is not available for subsequent claims. If you have a live notification against a £3m limit, size the next renewal on the assumption the £3m may be gone.
Historic frequency drives insurer sizing conversations. A firm with a five-year run of small claims is not a floor-limit conversation, and the insurer will say so.
Building Safety Act 2022 section 135 extends the Defective Premises Act 1972 limitation period for residential and higher-risk building work to 15 years prospective and 30 years retrospective for architects, engineers, surveyors, and other construction professionals. That is a materially different long-tail than most professionals were sized for pre-2022.
Consumer Duty (PRIN 2A) for FCA-authorised firms carries an enforcement window that can extend beyond the standard six-year limitation on private claims, particularly where systemic failings emerge on a delayed basis.
Standard regulator run-off obligations remain relevant. SRA imposes six years. ARB requires adequate provision. ICAEW imposes two years mandatory plus four recommended. Each extends the effective sizing question beyond the policy year in which work is done.
Five-partner LLP: 60 per cent residential conveyancing, 25 per cent commercial property, 15 per cent general commercial. Fee income £900,000. Clean claims record. No open notifications.
The framework points to £3m as the defensible minimum. Given how affordable top-up cover typically is at this profile, £5m is a reasonable conversation for peace of mind against a rare high-value tail event. The firm's decision is a documented judgement, not a calculator output.
Three-partner ICAEW firm doing tax advisory and small-company audit. Fee income £800,000. Clean claims record.
The regulator floor is £2m, but severity plus aggregation drives a realistic minimum closer to £5m. If the VAT planning aggregation is credible on the firm's own analysis, £10m is the honest conversation. The output is not "buy £10m"; it is "here is the reasoning that supports £5m or £10m, and here is what a director signed to record it".
Sticking to the regulator floor without severity analysis. The floor is not the answer; it is the point below which you cannot trade. Firms that never move above floor are firms that have never done the exercise.
Not documenting how you arrived at the limit. If the SRA, ARB, ICAEW, RICS, or an insurer challenges your sizing, "our broker said" is not defensible. The reasoning needs to be written down and signed by a director or partner.
Not adjusting for BSA 2022 section 135 exposure. Many architect, engineer, and surveyor firms are still sized against a pre-2022 six-year framework. The 15-year prospective and 30-year retrospective extension has changed the arithmetic materially for anyone touching residential or higher-risk building work.
Not thinking about aggregation on repeatable work. Conveyancing, tax planning, series design, and financial advice all produce aggregation exposure that individual engagement value understates.
Not accounting for contract obligations that emerge mid-year. A firm sized at £3m at renewal that signs a framework requiring £5m in month three is under-limit for nine months.
A broker's contribution is threefold. First, access to insurer data on claim severity by work type; the numbers to anchor Input 2 are not usually available inside the firm itself. Second, a wording review to establish whether the limit is per-claim, per-claim-and-defence-costs-in-addition, or aggregate — the difference materially affects what the limit pays out. Third, excess-layer economics; top-up cover is often more affordable than firms assume, and the marginal cost of going from £3m to £5m or £5m to £10m is generally less than the cost of the first £1m.
Documentation of the sizing decision, produced at renewal and signed off by a director or partner, is what a regulator or client due diligence exercise will ask to see.
Apex Insurance Brokers Limited is an FCA-authorised general insurance intermediary (FRN 724952) whose book is concentrated on professions PI: solicitors, accountants, architects, surveyors, financial advisers, IT consultants, management consultants, and engineers. The firm is director-led (Matthew Bartlett, SMF3, SMF16, SMF17) and the sizing conversation forms part of every renewal engagement. Where a firm has never worked through the six-input framework, the renewal is the point at which that gap is addressed and the reasoning is put on the file.
The regulator sets a floor. The correct number for your firm is arrived at by working through six inputs: regulator floor, worst credible severity, contract obligations, aggregation exposure, claims history, and long-tail statutory exposure. There is no single figure; the output is a documented judgement your firm can defend.
Sometimes. Frequently not. Regulator minimums are constructed to prevent uninsured firms from trading; they are not constructed to match the severity or aggregation exposure of any individual firm. A firm operating at the floor without doing the sizing exercise has not answered the question.
Depends on severity and aggregation. Where the largest plausible claim exceeds the contract limit, or aggregation could compound multiple claims into one, buying above contract is defensible. Where contracts and severity align, contract level is a reasonable figure.
For architects, engineers, surveyors, and other construction professionals touching residential or higher-risk building work, section 135 of the Building Safety Act 2022 extended the Defective Premises Act 1972 limitation period to 15 years prospective and 30 years retrospective. Firms in scope should be revisiting sizing.
Aggregation clauses in your wording determine whether multiple related claims collapse into a single claim against a single limit. Where you do repeatable work — conveyancing, tax planning, series design, tax scheme advice — the sizing question is the worst plausible aggregation scenario, not the individual engagement value.
Yes, and you should. A director-signed note recording the six inputs, the numbers used, the reasoning, and the limit selected sits on the file as evidence. Regulators asking about adequacy of cover expect to see that thinking.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952.