Navigating ACCA's Professional Indemnity Insurance Rules

With this cover you’ll get a little extra help to cover the cost of settling disputes brought against your business. Get cover up to £1 million and up to £100,000 for any single claim. Most of an accountants day to day work hinges on reliable access to the tech and systems that make your job possible.

Paul Gillett

If something were to happen to the your computers you use, then business can come to a standstill. Business equipment cover helps with the cost of replacing or repairing ant lost, stolen or accidentally damaged equipment. The level of cover you need depends on the equipment you’re insurance – always make sure to accurately value your equipment to avoid underinsurance.

• Choose an appropriate level of cover: Third-Party Only (TPO), Third-Party Fire and Theft (TPFT), or Comprehensive.
• Consider optional add-ons like breakdown cover, legal expenses insurance, or courtesy car provision.
• Review the policy excess amounts (compulsory and voluntary) and ensure they are affordable.
• Check if the policy includes coverage for personal belongings or audio equipment.

No two policies are the same, which is why their price isn’t either. There’s no one size fits all when it comes to insurance, so if you’d like to what it would cost you to insure your business with us, the easiest way to do that is to get a quote online and see exactly what you’d pay for the types and levels of cover you’d need. Our customers’ reviews, independently moderated and managed by feefo. *The guidance is provided on behalf of AXA by Arc Legal Assistance Ltd who are authorised and regulated by the Financial Conduct Authority. †Not all occupations are eligible for £10 million coverage, the best way to find out which level of cover you are eligible for is to get a quote. Existing customers may want to consult their policy documents. New regulations have significant implications for accountants A series of new regulations, either recently introduced or due to come into force, are set to bring significant implications for the accountancy sector. For firms, these new regulations (around anti-money laundering, register of overseas entities, probate and PII) create risks, at such time until they are embedded into business-as-usual practices.

Customer reviews

All practising staff should be made aware of the relevant updates and training provided to ensure compliance with AML, ROE verification, probate, and ACCA PII requirements. On 20 September 2023 from 12.30pm-1.30pm, please join us for a webinar to discuss regulatory changes and the impact this may have on your insurance. This session will further explain the changes and the implications for ACCA practitioners, and the transitional arrangements. Catherine Davis, ACCA relationship manager, Lockton companies If you have any questions about professional indemnity insurance please contact your Lockton Account Manager for further advice or email accountants@uk.lockton.com. Lockton is ACCA’s recommended broker for professional indemnity insurance A two-partner accountancy practice in the West Country signs off a set of management accounts for a client preparing for sale.

4.5 Run-off

Eighteen months after completion the buyer discovers that a director's loan account was recorded as repaid when in fact it was outstanding, and that working capital was overstated by roughly £180,000. The buyer's solicitors send a letter before action to the accountants. The claim — for the diminished value of the acquired business — is for £600,000. That kind of letter is uncomfortable enough on its own. What turns it from an uncomfortable letter into a practice-ending event is whether the firm has Professional Indemnity Insurance that responds, with cover wide enough and sensibly enough structured to absorb the defence costs and the eventual settlement.

Who’s it for?

PI cover for UK accountants is regulated, mandatory for ICAEW and ACCA members in practice, and far more nuanced than a single annual premium negotiation makes it look. This guide is for principals, sole practitioners, and finance directors at UK accountancy practices who want to understand what PI insurance is actually doing for them, what their regulator requires, and where the choices that matter at renewal really lie. It runs longer than most online explainers because the detail genuinely matters — a generic "minimum cover" rule of thumb has put many practices in difficulty when a claim arrives. At its core, Professional Indemnity Insurance — usually written as PI or PII — pays the legal costs of defending a civil claim made against your practice by a client or third party who says they have suffered financial loss as a result of professional services you provided, and pays any damages or settlement awarded against you up to the limit of the policy. In order to minimise the likelihood of increased premiums, accountancy firms should take steps to familiarise themselves with the regulations and implement necessary changes as soon as possible. In September 2022, updates to the existing UK anti-money laundering (AML) legislation came into force. In particular, the updates made a number of amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). Although many of the changes do not affect accountancy firms, there are certain areas of which they should be aware: All supervised firms are now required to perform a proliferation financing (PF) risk assessment to assess the risk that it may be used to enable proliferation financing Discrepancy reporting requirements are no longer limited to the onboarding stage of a business relationship, but have become an ongoing obligation The MLRs have been widened to apply to Limited Partnerships registered in England and Wales and Northern Ireland (Scottish Limited Partnerships are already subject to the regulations). Failure to comply with AML regulations can have serious consequences for the offending firm, including fines and sanctions, criminal proceedings and significant reputational damage. Firms at the point of renewal for their PI cover should anticipate additional scrutiny from insurers around the newly introduced regulations. On 1 August 2022, the UK government introduced the register of overseas entities (ROE): a new requirement for all overseas entities that own property in the UK to record information about themselves and their beneficial owners on a new register at Companies House by 31 January 2023. As part of the registration process, accountants may be required to perform verification of an overseas entity’s registrable beneficial owners. By nature, this is risky work, as an overseas entity will involve corporate structures spanning multiple jurisdictions.

4. ACCA Professional Indemnity Insurance Regulations

The minimum limits of indemnity will increase from £50,000 to £100,000, which will bet best free bets new customers affect smaller practices. It has been recognised for some time that this limit is not sufficient to reflect increasing legal costs and claim payments. Other income bands and limits have also changed. The minimum limit for Fidelity Guarantee Insurance (FGI) has increased from £50,000 to £100,000 and firms need to ensure sub-contractors are covered. This is an area where we’ve seen a number of claims in recent years.

When a Tax Error Becomes a Claim

Retroactive cover requirements have been introduced and PII policies should include full retroactive cover ie from the date the practice commenced. This is to counteract issues such as where some insurers state ‘when PI cover was first purchased’, which places onus on the insured to prove they have had cover for past liability. For certain high-risk activities where it can be difficult to place PI cover – such as tax mitigation work, financial services, and cyber related events – this can now be placed on an aggregated basis, as insurers can be more inclined to quote. Members and firms have a period of time to adjust to the changes in the PII requirements and obtain PII cover which is compliant with the new regulations. Under transitional arrangements, PII policy renewals on or after 1 January 2024 must comply with the new requirements.

11.4 What underwriters look at beyond fees

To avoid an increase in premiums, firms should take an active approach to ensure that they familiarise themselves with the new regulations, and take steps to address potential exposures: Identifying the ways in which AML regulations demand a change in business practice, and instilling the appropriate changes as part of business-as-usual practice as soon as possible. Firms should consider carefully whether they should undertake ROE work, weighing the business rationale for doing so against the potential risk exposures. If they do undertake ROE verification work, firms should ensure that verification is completed based on documents from a reliable source, independent of the client, and they should consider how often verification procedures must be repeated. Where required documentation for the ROE is only available to a client, firms should consider how else they might verify the information (for example, by seeking confirmation from the legal firm that drafted it). Where firms have created a separate Probate Entity for the undertaking of probate work, they must ensure all owners and directors are authorised as CILEx Practitioners. The inclusion of a strict liability within the ROE regime raises the possibility that any firm undertaking verification work will be exposed to possible criminal prosecution, regulatory sanction, and reputational damage should the verification function not be performed correctly. Firms’ increased liabilities under the ROE are already giving insurers cause for concern. The heightened exposure of accountancy firms to overseas entities raises the possibility that such firms will be used for the purposes of money-laundering or sanctioned individuals, where it is not possible to correctly identify true ownership.

• Maintain a valid motor insurance certificate (Certificate of Motor Insurance) for each vehicle.
• Ensure the insurance policy covers at least third-party liability as a minimum legal requirement.
• Display a valid insurance disc on the vehicle's windscreen if required by local jurisdiction.
• Notify your insurer immediately of any changes to vehicle details or registered keeper.
• Inform the insurer of any modifications that could affect the vehicle's risk profile.

Following the withdrawal of the Association of Chartered Certified Accountants (ACCA) from legal services, all accountancy firms wishing to offer probate work to their clients must set up a separate limited company or LLP firm to be designated as a CILEx-ACCA Probate Entity.

Practising certificate

In September 2022, updates to the existing UK anti-money laundering (AML) legislation came into force. In particular, the updates made a number of amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). Although many of the changes do not affect accountancy firms, there are certain areas of which they should be aware: All supervised firms are now required to perform a proliferation financing (PF) risk assessment to assess the risk that it may be used to enable proliferation financing Discrepancy reporting requirements are no longer limited to the onboarding stage of a business relationship, but have become an ongoing obligation The MLRs have been widened to apply to Limited Partnerships registered in England and Wales and Northern Ireland (Scottish Limited Partnerships are already subject to the regulations). Failure to comply with AML regulations can have serious consequences for the offending firm, including fines and sanctions, criminal proceedings and significant reputational damage. Firms at the point of renewal for their PI cover should anticipate additional scrutiny from insurers around the newly introduced regulations.

6.1 The CIOT minimum

On 1 August 2022, the UK government introduced the register of overseas entities (ROE): a new requirement for all overseas entities that own property in the UK to record information about themselves and their beneficial owners on a new register at Companies House by 31 January 2023. As part of the registration process, accountants may be required to perform verification of an overseas entity’s registrable beneficial owners. By nature, this is risky work, as an overseas entity will involve corporate structures spanning multiple jurisdictions. The inclusion of a strict liability within the ROE regime raises the possibility that any firm undertaking verification work will be exposed to possible criminal prosecution, regulatory sanction, and reputational damage should the verification function not be performed correctly. Firms’ increased liabilities under the ROE are already giving insurers cause for concern.

Further considerations

The heightened exposure of accountancy firms to overseas entities raises the possibility that such firms will be used for the purposes of money-laundering or sanctioned individuals, where it is not possible to correctly identify true ownership. Following the withdrawal of the Association of Chartered Certified Accountants (ACCA) from legal services, all accountancy firms wishing to offer probate work to their clients must set up a separate limited company or LLP firm to be designated as a CILEx-ACCA Probate Entity. All owners and directors of the Probate Entity must also be authorised as CILEx Practitioners, which requires first successfully completing an accredited course and assessment with an approved provider, covering specific areas of probate work. In the absence of standalone insurance products for probate work, all work conducted by the Probate Entity must be covered under the accountancy firm’s general professional indemnity (PI) insurance. In addition to the above external regulations, changes to the ACCA professional indemnity (PI) insurance regulations are due to come into effect in September 2023. All owners and directors of the Probate Entity must also be authorised as CILEx Practitioners, which requires first successfully completing an accredited course and assessment with an approved provider, covering specific areas of probate work. In the absence of standalone insurance products for probate work, all work conducted by the Probate Entity must be covered under the accountancy firm’s general professional indemnity (PI) insurance. In addition to the above external regulations, changes to the ACCA professional indemnity (PI) insurance regulations are due to come into effect in September 2023. The minimum limits of indemnity will increase from £50,000 to £100,000, which will bet best free bets new customers affect smaller practices. It has been recognised for some time that this limit is not sufficient to reflect increasing legal costs and claim payments. Other income bands and limits have also changed. The minimum limit for Fidelity Guarantee Insurance (FGI) has increased from £50,000 to £100,000 and firms need to ensure sub-contractors are covered.

Getting a quote for professional indemnity insurance

This is an area where we’ve seen a number of claims in recent years. Retroactive cover requirements have been introduced and PII policies should include full retroactive cover ie from the date the practice commenced. This is to counteract issues such as where some insurers state ‘when PI cover was first purchased’, which places onus on the insured to prove they have had cover for past liability.

• Update the policy promptly if you change your address, as the postcode affects the risk assessment.
• Add or remove drivers from the policy as circumstances change to avoid coverage issues.
• Cancel the policy correctly through the insurer if selling or scrapping the vehicle; do not just let it lapse.
• Be aware of cooling-off periods and cancellation fees when taking out or ending a policy.
• Review the policy annually at renewal to ensure it still meets your needs and remains competitive.
• Compare quotes from different insurers to ensure you are getting suitable coverage at a fair price.

For certain high-risk activities where it can be difficult to place PI cover – such as tax mitigation work, financial services, and cyber related events – this can now be placed on an aggregated basis, as insurers can be more inclined to quote. Members and firms have a period of time to adjust to the changes in the PII requirements and obtain PII cover which is compliant with the new regulations. Under transitional arrangements, PII policy renewals on or after 1 January 2024 must comply with the new requirements.

• Keep proof of insurance accessible, either in physical or digital form, for presentation to authorities.
• Ensure all named drivers on the policy are disclosed and meet the insurer's eligibility criteria.
• Pay insurance premiums on time to avoid policy lapse and potential legal penalties.
• Understand the policy's territorial limits and ensure coverage applies for where you drive.

To avoid an increase in premiums, firms should take an active approach to ensure that they familiarise themselves with the new regulations, and take steps to address potential exposures: Identifying the ways in which AML regulations demand a change in business practice, and instilling the appropriate changes as part of business-as-usual practice as soon as possible.

PII Limit of Insurance Tables for Accountants

Firms should consider carefully whether they should undertake ROE work, weighing the business rationale for doing so against the potential risk exposures. If they do undertake ROE verification work, firms should ensure that verification is completed based on documents from a reliable source, independent of the client, and they should consider how often verification procedures must be repeated. Where required documentation for the ROE is only available to a client, firms should consider how else they might verify the information (for example, by seeking confirmation from the legal firm that drafted it).

Stage / Milestone	Recommended Time Before Start Date	Action Required
Initial research & obtaining quotes	8-12 weeks	Contact brokers, compare policies and premiums.
Submit formal PII application	4-6 weeks	Complete insurer's proposal form with accurate data.
Receive policy documentation	2-3 weeks before start	Review policy wording, schedule, and certificates.
Notify ACCA and provide evidence	Immediately upon receipt	Submit certificate of insurance via ACCA online portal.
Policy commencement	On first day of practice	Cover must be active before any client work begins.

Where firms have created a separate Probate Entity for the undertaking of probate work, they must ensure all owners and directors are authorised as CILEx Practitioners. All practising staff should be made aware of the relevant updates and training provided to ensure compliance with AML, ROE verification, probate, and ACCA PII requirements. On 20 September 2023 from 12.30pm-1.30pm, please join us for a webinar to discuss regulatory changes and the impact this may have on your insurance. This session will further explain the changes and the implications for ACCA practitioners, and the transitional arrangements. Catherine Davis, ACCA relationship manager, Lockton companies If you have any questions about professional indemnity insurance please contact your Lockton Account Manager for further advice or email accountants@uk.lockton.com. Lockton is ACCA’s recommended broker for professional indemnity insurance A two-partner accountancy practice in the West Country signs off a set of management accounts for a client preparing for sale. Eighteen months after completion the buyer discovers that a director's loan account was recorded as repaid when in fact it was outstanding, and that working capital was overstated by roughly £180,000. The buyer's solicitors send a letter before action to the accountants. The claim — for the diminished value of the acquired business — is for £600,000. That kind of letter is uncomfortable enough on its own. What turns it from an uncomfortable letter into a practice-ending event is whether the firm has Professional Indemnity Insurance that responds, with cover wide enough and sensibly enough structured to absorb the defence costs and the eventual settlement. PI cover for UK accountants is regulated, mandatory for ICAEW and ACCA members in practice, and far more nuanced than a single annual premium negotiation makes it look. This guide is for principals, sole practitioners, and finance directors at UK accountancy practices who want to understand what PI insurance is actually doing for them, what their regulator requires, and where the choices that matter at renewal really lie. It runs longer than most online explainers because the detail genuinely matters — a generic "minimum cover" rule of thumb has put many practices in difficulty when a claim arrives.

Run-off cover — easy to ignore, expensive to forget

With this cover you’ll get a little extra help to cover the cost of settling disputes brought against your business. Get cover up to £1 million and up to £100,000 for any single claim. Most of an accountants day to day work hinges on reliable access to the tech and systems that make your job possible. If something were to happen to the your computers you use, then business can come to a standstill. Business equipment cover helps with the cost of replacing or repairing ant lost, stolen or accidentally damaged equipment.

Register of Overseas Entities

The level of cover you need depends on the equipment you’re insurance – always make sure to accurately value your equipment to avoid underinsurance. No two policies are the same, which is why their price isn’t either. There’s no one size fits all when it comes to insurance, so if you’d like to what it would cost you to insure your business with us, the easiest way to do that is to get a quote online and see exactly what you’d pay for the types and levels of cover you’d need. Our customers’ reviews, independently moderated and managed by feefo. *The guidance is provided on behalf of AXA by Arc Legal Assistance Ltd who are authorised and regulated by the Financial Conduct Authority.

What is professional indemnity insurance in simple terms?

†Not all occupations are eligible for £10 million coverage, the best way to find out which level of cover you are eligible for is to get a quote. Existing customers may want to consult their policy documents. New regulations have significant implications for accountants A series of new regulations, either recently introduced or due to come into force, are set to bring significant implications for the accountancy sector. For firms, these new regulations (around anti-money laundering, register of overseas entities, probate and PII) create risks, at such time until they are embedded into business-as-usual practices. In order to minimise the likelihood of increased premiums, accountancy firms should take steps to familiarise themselves with the regulations and implement necessary changes as soon as possible. At its core, Professional Indemnity Insurance — usually written as PI or PII — pays the legal costs of defending a civil claim made against your practice by a client or third party who says they have suffered financial loss as a result of professional services you provided, and pays any damages or settlement awarded against you up to the limit of the policy.