Succession is one of the most consequential events in a professional firm's life — and one where PI cover is most often overlooked until it becomes urgent. Whether the plan is a buyout, third-party sale, merger, or orderly wind-down, the PI position has to be planned alongside the corporate, tax and regulatory work. This entry sets out how Apex Insurance Brokers approaches PI in succession.
Four structures dominate. An internal buyout sees continuing partners acquire the interests of retiring partners — the firm survives, but its capital base changes. A third-party sale transfers the practice to an incoming firm. A merger combines two practices under one successor. A wind-down closes the firm entirely, with historical liabilities still to run their course.
Each carries a distinct PI shape. In a buyout the underlying policy usually continues in the surviving firm's name, subject to notification of the composition change. In a sale, the successor's PI may be extended to cover the acquired book, or run-off arranged for the vendor. Mergers typically involve a combined policy with agreed limits and, sometimes, run-off for pre-merger exposures. A wind-down almost always requires standalone run-off for the statutory tail.
For regulated professions, continuous cover is a regulatory requirement, not a commercial preference. The SRA Indemnity Insurance Rules 2020 require solicitors' firms in England and Wales to hold qualifying PI cover meeting the minimum terms and conditions at all times, with a defined extended policy period and a mandatory six-year run-off on cessation. The ICAEW PII Regulations 2020 impose parallel obligations on chartered accountants. Any gap in cover exposes the firm and its partners to regulatory action and personal liability. Succession events are when gaps most commonly occur — a rushed completion date, a missed renewal, or an assumption that a successor's cover will retrospectively pick up historical work.
Run-off protects a firm and its former partners against claims arising from work done before cessation but notified afterwards. Regulator minimums typically require six years, but many professions extend the practical horizon. Higher-risk building work under the Building Safety Act 2022 regime pushes accountable persons and designers into a longer tail — 15 years for certain HRB defects — and Apex generally recommends matching the run-off horizon to limitation exposure rather than the regulator floor. Run-off is normally purchased as a single lump-sum premium at cessation, priced against final-year fee income, claims history and practice areas, and cannot usually be cancelled once bound.
Departing partners often underestimate how PI exposure affects the price the continuing partnership will pay. Buying partners inherit historical work as well as future earnings. Prudent buyers discount goodwill to reflect estimated run-off cost, retained deductibles, and any known or foreseeable claims. Sellers with clean claims records support a higher valuation. The PI history — five years of claims data, excess levels, insurer commentary — is now a standard dataroom item.
Under the Partnership Act 1890 general partners are jointly and severally liable for the firm's obligations; departing partners cannot walk away from historical exposures by resigning. The Limited Liability Partnerships Act 2000 provides members with limited liability at the entity level, but personal liability can still attach for individual negligence. Run-off — arranged for the firm and, where relevant, naming departing individuals — is what stands between the retired partner and a personal claim years later.
Insurers price run-off carefully. The premium reflects closing-year turnover, claims profile, retained practice areas, number of former partners, and length of run-off. Firms with concentrated exposure to litigation-prone work — construction, tax planning, corporate finance — see higher tail loading than diversified practices. Early conversations with the incumbent insurer give the firm the best chance of a reasoned quote and alternative markets.
Apex typically works through: confirming the regulatory minimum applicable to the profession; mapping cessation and transition dates against the renewal date; obtaining indicative run-off quotations from the incumbent and one or two alternatives; reviewing proposal-form implications of the composition change under section 3 of the Insurance Act 2015; documenting individual-partner requirements; and diarising the six-, twelve- and fifteen-year checkpoints.
Illustrative scenario only — not a description of any specific client. A five-partner accountancy firm; two partners retiring in 2026 with buyout by the three remaining partners. The PI considerations Apex would coordinate include: (i) continuous cover during the transition, ensuring no gap between the outgoing composition and the new three-partner structure; (ii) run-off protecting the retiring partners for their share of historical work, meeting the ICAEW minimum and any longer horizon justified by practice mix; (iii) a revised sum-insured limit reflecting the smaller firm's reduced fee income and risk profile; and (iv) a proposal-form update disclosing the composition change under section 3 of the Insurance Act 2015, so the fair-presentation duty is discharged cleanly. The broker sequences these so transition day arrives with paperwork in place.
Succession considerations vary by profession. See our guides for solicitors, accountants, architects, surveyors, and IFAs. Related: bereavement and serious illness in a partnership.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.