Legal Professionals: Addressing New Challenges in Solicitor PI Insurance

For solicitors, Professional Indemnity Insurance remains a regulatory requirement enforced by the Solicitors Regulation Authority (SRA). The market for solicitor PI coverage, however, is experiencing rising premiums and more restrictive terms, driven by:

• Increased Claims Activity: A surge in negligence claims linked to property conveyancing and probate services, exacerbated by the complexities of rising interest rates and disputes over real estate transactions.
• Compliance with the Solicitors’ Code of Conduct: Legal practices face heightened scrutiny regarding ethical standards and anti-money laundering measures, increasing their liability exposure.
• Cyber and Data Risks: As law firms handle sensitive client data, cyberattacks are emerging as a significant concern, necessitating PI policies with robust cyber extensions.

Key Takeaway: Law firms should adopt robust risk management practices, particularly around client onboarding and documentation, to mitigate exposures and secure favourable insurance terms.

Construction: Persistent PI Challenges in Design and Build

The construction industry remains under pressure from stringent regulatory and market conditions, particularly in the wake of fire safety concerns following the Grenfell tragedy. Notable developments include:

• Cladding and Fire Safety Risks: Professionals involved in design-and-build projects face reduced insurer appetite for risks related to external wall systems and fire safety assessments. While RICS has revised its PI insurance requirements, exclusions and high premiums remain for work conducted on taller buildings or legacy projects.
• Evolving Legal Frameworks: The Building Safety Act 2022 and Fire Safety Act 2021 impose new responsibilities on construction professionals, increasing their liability for defects and extending limitation periods for claims.
• Capacity Constraints: Limited insurer capacity has made it challenging for contractors and design professionals to obtain comprehensive PI cover, with policies often including restrictive exclusions.

Key Takeaway: Contractors should work with brokers to address market challenges, ensuring they present detailed risk information and maintain compliance with evolving safety standards.

Financial Services: Economic Pressures Driving PI Exposures

The financial services sector faces mounting pressures as economic uncertainty influences both advisory practices and client expectations. Key factors shaping PI risks include:

• Volatility in Investment Markets: Financial advisors are increasingly exposed to claims of mis-selling or poor advice as clients experience portfolio losses amid fluctuating markets.
• Heightened Regulation: The introduction of stricter oversight by the Financial Conduct Authority (FCA) has led to increased scrutiny of compliance, risk management, and suitability assessments in financial advice.
• Fraud and Cybercrime: Financial consultants handling digital transactions face growing risks from fraud and cybersecurity incidents, often necessitating expanded PI coverage.

Key Takeaway: Financial professionals must strengthen their compliance frameworks and communicate transparently with clients to minimize disputes and reduce liability risks.

Navigating the Future with Expertise

Across all sectors, evolving risk landscapes necessitate proactive measures to secure adequate PI coverage. Businesses must collaborate with experienced brokers to:

• Understand sector-specific challenges.
• Identify emerging risks.
• Secure comprehensive and competitively priced insurance solutions.

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