How Much PI Insurance Does an Accountant Need?

Why should accountants buy cover?
Is HMRC tax investigation cover the same as PI?
14. The R&D tax advice claim wave
Self-Employed Accountant Insurance
How do claims from “going concern” or insolvency advice get treated?

‘It is in the public interest, and the interests of our practitioners and firms, that this safeguard exists and does so without disproportionate regulatory burdens. If PII cover is inadequate or non-existent, claims brought against the firm are uninsured and the lack of protection exposes practitioners to significant business risk and the loss of their own personal assets.’ The key changes to regulation 2 (Interpretation) and regulation 9 (Professional indemnity insurance) of the Global Practising Regulations are as follows: New Total income bands and PII limits:Total Income ˂£600,000PII Limit Greater of:(i) two and a half times the firm’s relevant total income; and(ii) £100,000Total Income ≥ £600,000PII Limit At least £1.5 million Although expressed in pound sterling (GBP), the limits should be applied in local currency equivalents, such as the euro Twenty-five times the largest fee multiplier has been removed from calculation of PII limits Sub-contractors must be included in PII and FGI policies Liabilities covered extended to include sub-contractors Work sub-contracted included in total income Uninsured excess restricted to £20,000 per principal Minimum PII and FGI increased from £50,000 to £100,000 High risk exposures (such as such as cyber related events, tax planning or financial services) covered on an aggregate basis New regulations on Retroactive cover and Regulated work It should be noted that the PII limits are minimum requirements and practitioners must consider the risk profile of their work and their clients and determine whether or not they should carry PII cover in excess of the minimum required. For example, some regulated work will require higher levels of PII cover arising from legislative requirements, or the requirements set by national bodies or regulators in a particular sector. There are no changes to the requirements for continuity following cessation. Run-off cover provides important protection for consumers and members and the requirement for PII cover for a period of six years after ceasing to engage in public practice balances the interests of practitioners and consumers. It also aligns with the normal limitation period in statute of six years from the date on which the negligent act occurred.

Why should accountants buy cover?

The session explained the PII changes and the implications for ACCA practitioners, and the transitional arrangements. View the Webinar on Regulatory changes and the implications for your insurance Understand the requirements for Designated Professional Body, CILEX- and CAA/ATOL-registered accountants To carry out certain regulated activities, accountancy firms may need to purchase additional levels of Professional Indemnity Insurance. Failure to do so could leave you exposed to risk in the event of a mistake, oversight or third-party claim. Below, we explain the requirements for Designated Professional Body, CILEX- and CAA/ATOL-registered accountants. Professional Indemnity Insurance (PII) is compulsory for all ACCA members who hold a practising certificate and engage in public practice and regulated activities in the UK and Ireland.

What work is considered high risk?

The limit required for PII is dependent on a firm’s relevant total income, details of which can be found in the ACCA PII Regulations. Certain regulated work will require higher levels of PII cover arising from legislative requirements, or the requirements set by national bodies or regulators in a particular sector. ACCA members are able to carry bet free bets uk existing customers out a limited number of ‘exempt’ regulated activities under the Financial Services and Markets Act 2000, without the need to obtain Financial Conduct Authority (FCA) approval. These activities include mortgages, long-term care insurance and insurance distribution activities. The level of PII required to undertake these activities varies: For mortgages and long-term care insurance, there is no separate PII requirement and normal rules will apply.

15.6 Cost picture for IP PI

However, an ACCA firm wishing to carry on insurance distribution must comply with professional indemnity insurance requirements under the insurance distribution directive (IDD). Firms undertaking insurance distribution services are required to hold professional indemnity insurance (PII) equivalent to at least €1,250,000 per claim and €1,850,000 in the aggregate (total). Note that referring a client to another adviser is not an insurance distribution activity and is therefore not subject to the regulations. ACCA accountants are able to offer probate services to their clients by becoming authorised as CILEX Practitioners (ACCA-Probate) and setting up a separate CILEX-ACCA Probate Entity. As part of the requirements to become an authorised CILEX Practitioner, firms authorised and regulated by CILEX must take out and maintain PII in accordance with the CILEX Professional Indemnity Insurance Rules. ACCA’s Regulatory Board took into consideration concerns about the availability of run-off cover in the current insurance market, but it decided that run-off cover should remain mandatory for a period of six years, due to the high level of claims arising more than two years following cessation and the need to provide member protection. The new PII requirements are effective from 1 September 2023. However, members and firms have been given a period of time to adjust to the changes and obtain PII cover which is compliant with the new regulations.

Is HMRC tax investigation cover the same as PI?

This will ensure that you are adhering to your regulatory obligations. To help you establish the appropriate level of cover, you should consider the following factors during your assessment: ACCA has minimum insurance requirements that each member must adhere to how long your business has been established, including any predecessor firms historical claims – these can provide insight to potential future claims, especially if there are any identifiable trends the maximum potential value of a single claim – this will be influenced by the largest transaction values undertaken the total potential value of a series of related claims your likely exposure to claims – this is influenced by the practice areas undertaken and your typical clients. For example, corporate finance work and corporation tax tend to incur higher claims payments any activities that could expose your practice to risk, including the nature and level of undertakings accepted the possibility of a claim being made against you in every department if the work is ongoing or on a one-off basis the maximum potential exposure of the client and other interested parties. Although a claim would naturally include the core financial loss to the claimant, the settlement may extend to claimants’ costs in addition itigation costs could be significant and these would be included within any claim payment that is made. Another important consideration is your client base. Under transitional arrangements, PII policy renewals on or after 1 January 2024 must comply with new requirements.

ACCA Member Type	Minimum Limit of Indemnity	Maximum Deductible	Coverage Requirement
Practising Certificate Holder (Audit)	GBP 1,500,000	GBP 5,000	Per claim, any one occurrence
Practising Certificate Holder (Non-Audit)	GBP 500,000	GBP 2,500	Aggregate for all claims
Insolvency Practitioner	GBP 2,500,000	GBP 10,000	Per claim, any one occurrence
Member in Business (Non-Practising)	Not Mandatory	N/A	Recommended by employer

Policy Feature	Requirement	Purpose / Rationale
Run-off Cover	Minimum 6 years post-termination	Covers claims arising from work done while insured
Breach of Confidentiality	Must be included	Protects against inadvertent data disclosure
Loss of Documents	Must be included	Covers costs of replacing or restoring documents
Libel and Slander	Must be included	Protects against defamation claims
Fidelity Guarantee	Optional but recommended	Covers client money dishonesty by employees

Failure to do so could leave you exposed to risk in the event of a mistake, oversight or third-party claim.

Failure to display the EL certificate can result in a £1,000 fine.
Records of EL insurance must be kept for 40 years, as claims can be made long after exposure.
Even if you are a limited company, inadequate insurance can pierce the corporate veil in cases of negligence.
Business rates or utility providers may require proof of insurance before providing services.
Minimum requirements are a baseline; adequate cover should be based on a full risk assessment.
Online business portals may require uploading insurance certificates to maintain seller status.
Employee count fluctuations must be reported to your insurer to maintain valid EL cover.

Below, we explain the requirements for Designated Professional Body, CILEX- and CAA/ATOL-registered accountants. Professional Indemnity Insurance (PII) is compulsory for all ACCA members who hold a practising certificate and engage in public practice and regulated activities in the UK and Ireland. The limit required for PII is dependent on a firm’s relevant total income, details of which can be found in the ACCA PII Regulations. Certain regulated work will require higher levels of PII cover arising from legislative requirements, or the requirements set by national bodies or regulators in a particular sector.

Check if your business needs Professional Indemnity insurance as mandated by your professional body.
Review client contracts, as they often specify minimum insurance levels for Public Liability.
Assess the value of assets and potential business interruption to determine adequate property insurance.
Consider Cyber Liability insurance, increasingly required in contracts for handling client data.

ACCA members are able to carry bet free bets uk existing customers out a limited number of ‘exempt’ regulated activities under the Financial Services and Markets Act 2000, without the need to obtain Financial Conduct Authority (FCA) approval. These activities include mortgages, long-term care insurance and insurance distribution activities. The level of PII required to undertake these activities varies: For mortgages and long-term care insurance, there is no separate PII requirement and normal rules will apply. However, an ACCA firm wishing to carry on insurance distribution must comply with professional indemnity insurance requirements under the insurance distribution directive (IDD). Firms undertaking insurance distribution services are required to hold professional indemnity insurance (PII) equivalent to at least €1,250,000 per claim and €1,850,000 in the aggregate (total). Note that referring a client to another adviser is not an insurance distribution activity and is therefore not subject to the regulations. ACCA accountants are able to offer probate services to their clients by becoming authorised as CILEX Practitioners (ACCA-Probate) and setting up a separate CILEX-ACCA Probate Entity.

Fines for non-compliance with Employers' Liability insurance are enforced by the Health and Safety Executive (HSE).
Operating without required motor insurance can lead to vehicle seizure, fines, and penalty points.
Breaching contractually agreed insurance levels can lead to contract termination and legal claims.
Operating without mandated Professional Indemnity can result in disciplinary action from your regulatory body.
Inadequate insurance can lead to personal liability for directors if the company cannot cover claims.

As part of the requirements to become an authorised CILEX Practitioner, firms authorised and regulated by CILEX must take out and maintain PII in accordance with the CILEX Professional Indemnity Insurance Rules. The minimum level of cover is £2m (any one claim, excluding defence costs) and applies regardless of the actual wording bet new customer free bet offers of the policies. Before taking out cover, firms must complete the CILEX Professional Indemnity Application Form, which can be used with CILEX qualifying insurers, and receive provisional authorisation. Once a quote has been agreed, firms should arrange for a copy of the insurance certification to be sent to CILEX.

14. The R&D tax advice claim wave

5.2 Excess

It also aligns with the normal limitation period in statute of six years from the date on which the negligent act occurred. ACCA’s Regulatory Board took into consideration concerns about the availability of run-off cover in the current insurance market, but it decided that run-off cover should remain mandatory for a period of six years, due to the high level of claims arising more than two years following cessation and the need to provide member protection. The new PII requirements are effective from 1 September 2023. However, members and firms have been given a period of time to adjust to the changes 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 new requirements.

9.1 The IFA minimum

All existing PII policies must comply with the new requirements by 1 January 2025. The Global Practising Regulations (effective 1 September 2023) are available in the related downloads section of this page. Further details are provided in the Commentary on new PII Requirements (effective 1 September 2023) and in the Appendix there is a useful summary of the changes, including a comparison of the current and new PII requirements. A new Guidance Factsheet on PII Requirements (effective 1 September 2023) is also available in the related downloads section. ACCA partnered with Lockton to deliver a webinar on the new PII regulations on 20 September 2023. In addition to ACCA membership, ACCA members wishing to undertake CAA and ATOL reporting work must register and complete the training required by CAA/ATOL to receive a licence. Under the eligibility terms for a CAA/ATOL licence, members must hold PII that is at least sufficient to cover the liability cap in the CAA Guidance Note 10. The current liability cap ranges from £250,000 to £20,000,000, depending on the number of passengers and the public revenue of the particular ATOL holder. It is essential to check your limit of indemnity and any sub-limits to ensure you have the appropriate level of PII to cover the work your firm intends to undertake. This is not only to make sure that you comply with the relevant regulatory requirements, but also to make sure you are adequately protected against claims brought against you. Failure to do so could expose you to significant business risk and potential loss of your own personal assets. Please contact us if you need any guidance on the limits required. For more information, visit Lockton’s ACCA Accountants page. Lockton is ACCA’s recommended broker for professional indemnity insurance: find out more.

Minimum cover for Public Liability in many service contracts often starts at £1 million.
Professional Indemnity minimums for accountants and auditors are often set by their professional institutes.
Cyber insurance minimums in IT contracts are becoming standardized, often requiring £1-5 million cover.
Product Liability cover of £2-5 million is a common minimum for manufacturers supplying large retailers.

The key factors to consider when arranging your professional indemnity insurance cover When it comes to assessing your professional indemnity arrangements and selecting the right limit, there are several key factors to consider. These include your regulatory body, client base and any potential exposures your practice may face.

Type of Breach	Potential ACCA Action	Practice Implications	Rectification Period
No valid insurance in place	Suspension of practising certificate	Cannot undertake public practice work	Immediate
Inadequate policy limits	Formal warning, requirement to upgrade	Risk of non-compliant status with clients	30 days
Lack of required policy features	Directive to amend policy	Coverage gaps may leave firm exposed	60 days
Failure to provide evidence	Administrative fine, investigation	Delays in certificate renewal	14 days
Misrepresentation on application	Disciplinary proceedings, possible expulsion	Severe reputational damage	N/A

It’s worth reviewing your arrangements throughout the year, not just at renewal, especially if you are venturing into a new area or taking on more work. This will ensure that you are adhering to your regulatory obligations. To help you establish the appropriate level of cover, you should consider the following factors during your assessment: ACCA has minimum insurance requirements that each member must adhere to how long your business has been established, including any predecessor firms historical claims – these can provide insight to potential future claims, especially if there are any identifiable trends the maximum potential value of a single claim – this will be influenced by the largest transaction values undertaken the total potential value of a series of related claims your likely exposure to claims – this is influenced by the practice areas undertaken and your typical clients. For example, corporate finance work and corporation tax tend to incur higher claims payments any activities that could expose your practice to risk, including the nature and level of undertakings accepted the possibility of a claim being made against you in every department if the work is ongoing or on a one-off basis the maximum potential exposure of the client and other interested parties. Although a claim would naturally include the core financial loss to the claimant, the settlement may extend to claimants’ costs in addition itigation costs could be significant and these would be included within any claim payment that is made. Another important consideration is your client base.

Self-Employed Accountant Insurance

Some clients, such as local authorities and lenders, may ask for higher limits on certain transactions. Larger client contracts involving sums greater than the compulsory primary indemnity limits need to be carefully reviewed. If you decide that upcoming work potentially creates a higher-than-average risk, additional premium for top-up insurance needs to be factored into your decision about whether you accept the retainer. Some clients, such as local authorities and lenders, may ask for higher limits on certain transactions. Larger client contracts involving sums greater than the compulsory primary indemnity limits need to be carefully reviewed.

How do claims from “going concern” or insolvency advice get treated?

The minimum level of cover is £2m (any one claim, excluding defence costs) and applies regardless of the actual wording bet new customer free bet offers of the policies. Before taking out cover, firms must complete the CILEX Professional Indemnity Application Form, which can be used with CILEX qualifying insurers, and receive provisional authorisation. Once a quote has been agreed, firms should arrange for a copy of the insurance certification to be sent to CILEX. In addition to ACCA membership, ACCA members wishing to undertake CAA and ATOL reporting work must register and complete the training required by CAA/ATOL to receive a licence. Under the eligibility terms for a CAA/ATOL licence, members must hold PII that is at least sufficient to cover the liability cap in the CAA Guidance Note 10.

Professional Indemnity Insurance Regulations

The current liability cap ranges from £250,000 to £20,000,000, depending on the number of passengers and the public revenue of the particular ATOL holder. It is essential to check your limit of indemnity and any sub-limits to ensure you have the appropriate level of PII to cover the work your firm intends to undertake. This is not only to make sure that you comply with the relevant regulatory requirements, but also to make sure you are adequately protected against claims brought against you. Failure to do so could expose you to significant business risk and potential loss of your own personal assets. Please contact us if you need any guidance on the limits required.

16.4 The trade-off between limit and excess

For more information, visit Lockton’s ACCA Accountants page. Lockton is ACCA’s recommended broker for professional indemnity insurance: find out more. The key factors to consider when arranging your professional indemnity insurance cover When it comes to assessing your professional indemnity arrangements and selecting the right limit, there are several key factors to consider. These include your regulatory body, client base and any potential exposures your practice may face. It’s worth reviewing your arrangements throughout the year, not just at renewal, especially if you are venturing into a new area or taking on more work. If you decide that upcoming work potentially creates a higher-than-average risk, additional premium for top-up insurance needs to be factored into your decision about whether you accept the retainer.

Danny Exnar