New ACCA PII Regulations

We are authorised and regulated by the Financial Conduct Authority — FRN 724952. Registered in England and Wales — Companies House 07014570.

4. ACCA Professional Indemnity Insurance Regulations

Disclose accurately at renewal — non-disclosure voids the cover for an R&D claim. No — fines and penalties imposed on the firm are uninsurable as a matter of UK public policy. FRC defence costs and investigation costs are typically insurable, and these are often the larger figure. What is a Liability Limitation Agreement (LLA)? An LLA is permitted under s.534-538 of the Companies Act 2006 and allows an audit client and auditor to agree a cap on auditor liability for one financial year.

The benefits of joining ICPA are clear. On average, members save thousands a year with the ICPA, as well as benefiting from unrivalled support and resources.

It must be shareholder-approved, "fair and reasonable" and disclosed. Common on private audits, rare on listed. Do I need both Fee Protection (Tax Investigation) Insurance and PI? Fee Protection pays the professional fees of running an HMRC enquiry. PI pays damages where the practitioner's work was negligent. Registered office: details available on our About page. Always read it alongside the current published rules of your accountancy body and your individual policy wording. Professional Indemnity placement should be undertaken with a broker authorised under the FCA's Insurance Distribution rules.

• Insurance requirements can be stipulated in the Articles of Association for limited companies.
• Shareholders' agreements may mandate specific Directors' and Officers' Liability cover levels.
• Bank loans or financing agreements often require asset and key person insurance as collateral.
• Landlord lease agreements frequently require tenants to have Public Liability insurance.

The next scheduled review is November 2026.

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Still not sure about how much PI cover you need?

They are complementary; neither replaces the other. Modern PI usually covers the liability arising from a cyber-driven failure of professional services. It does not typically cover ransom, system rebuild, business interruption or notification costs — those need a standalone cyber policy. Can I place PI outside the ICAEW bet bookie offers uk Participating Insurer list? Cheaper non-participating quotes are typically not a permitted alternative under ICAEW PII Regulations.

Current PII Regulations

What happens if my PI insurer fails? PI policies written by UK-authorised insurers benefit from FSCS protection (currently 90% of the claim without limit for compulsory insurance, and 90% of claim without limit for PI for individuals and small businesses for professional indemnity claims). Always confirm FSCS eligibility for your specific cover. I'm retiring and selling my practice — does the buyer's PI cover my prior work? Only if the buyer's PI is structured to take over prior-acts liability, which is a specific clause that must be negotiated. Registered in England and Wales, Companies House number 07014570. This guide is technical reference material, not regulated advice. Professional indemnity cover for the period after a practitioner ceases to practise is becoming harder to find As you are probably aware, ACCA requires that members who cease to practise or are about to retire maintain professional indemnity (PI) cover for a six year 'run-off' period.

• When hiring subcontractors, ensure they hold their own EL insurance to avoid liability transferring to you.
• For joint ventures, a project-specific insurance package meeting all parties' minimums is often required.
• When working overseas, local statutory insurance minimums must be met, which can differ significantly.
• For mergers and acquisitions, due diligence must verify all target company insurance meets legal minimums.
• Temporary event insurance must meet local authority requirements for public safety and liability.

This cover provides protection should any claims arise from work done before the practice was wound up. ACCA is hearing from an increasing number of members who are struggling to obtain suitable run-off insurance. Ordinarily, run-off cover is arranged in one of two ways: by setting up a six-year block policy, which is paid for in advance by setting up an annual policy, which is then renewed each year for six years. Traditionally, run-off insurance can only be arranged with the insurer who provided the PI cover while the practice was trading. Very few insurers, if any, will now consider providing run-offer cover for a risk that had been held insured with another underwriter prior to retirement/cessation. Moreover, any insurer will also require to have held the risk for at least two years before they will even consider providing a six-year block of cover. With few options available previously, the process is now even further fraught with difficulties, due largely to the prevailing hard market conditions for PI generally. Some insurers and managing general agents (MGAs) have withdrawn from the PI market for accountants completely, while others are reducing their overall exposure to risk and so are no longer able to offer the six-year run-off blocks of cover. Similarly, seeking to curtail their exposure, insurers may only provide minimum limits of indemnity or restrict cover further by providing a single total limit on aggregated basis over the period of cover.

Accountants Guide to Professional Indemnity Insurance

PI is regulatory, not statutory, for most accountants. Audit firms hold PI under the audit registration rules; the FCA can mandate PI for firms with regulated activity. The practical effect is the same — without PI, the practitioner cannot lawfully hold a practising certificate. Does my PI cover HMRC penalties and interest? PI does not cover fines or penalties imposed on the practitioner by HMRC, FRC, or any regulator (uninsurable as a matter of UK public policy).

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It does generally cover the client's damages where those damages include penalties or interest the client suffered because of the accountant's negligence. What is "run-off" cover and how long do I need it? Run-off is PI cover that continues after a firm ceases trading, covering claims that come in for work done before cessation. Minimum: 6 years for ACCA, CIOT, ATT, AAT, IFA; minimum 2 years for ICAEW (industry standard 6 years). For audit and insolvency work, 10-15 years is prudent. All of this means that retiring accountants have a real problem effecting appropriate run-off cover. By way of a troubling example, we were contacted recently by a retired accountant, who had purchased an annually renewable run-off policy with an MGA on which a claim had been made. Unfortunately, the accountant had been late in returning the renewal forms and the MGA simply declined to renew the policy. In another instance, also involving an MGA, annual cover could not be renewed because the MGA simply withdrew from the professional indemnity market completely. We have received several such requests to place run-off cover midway through the six-year period when insurers depart the scene. While we are obviously happy to help, you must be aware that there are very few insurers available to assist at the present time.

Importance of run-off cover

The default is that you continue to need run-off cover. Sale price negotiations should include who funds the run-off. Author: Apex Insurance Brokers Ltd — written by the Apex commercial broking team. Read more on the Apex team page. About Apex Insurance Brokers Ltd Apex Insurance Brokers Ltd is a UK commercial insurance broker based in Bristol, specialising in Professional Indemnity for accountants, solicitors, surveyors and the wider professional-services sector. As such, when you are contemplating retirement or cessation of practice, you must also consider the importance of addressing the continuing need for PI cover and be sure that it is placed properly. We therefore recommend that in the year or so you before you intend to close down or sell your practice, you must ensure that your PI cover is placed with a stable, A-rated insurer and that you engage the services of a specialist PI insurance broker such as Lockton to assist you with the vagrancies of the PI market.

About Apex Insurance Brokers

I'm an ICAEW firm with £1.6m of fees — what's the minimum? So £3m is the minimum; "adequate" beyond £3m needs justification. What if I'm a member of both ICAEW and CIOT? You comply with the highest applicable standard. ICAEW's formula is usually higher than CIOT's at the firm sizes where this is a live question.

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Can I take a higher excess to reduce premium? Your regulator caps the excess (ICAEW: lower of £30k per principal or 3% of gross fees; ACCA: 2% of gross fees). Within that ceiling, you can negotiate — but the arithmetic of premium saving versus self-insurance retention rarely favours sole practitioners. Does R&D advisory get treated differently? Underwriters now scrutinise R&D advisory specifically, often impose sub-limits, exclude contingent-fee work, or rate it heavily. Should you be considering the sale of your practice, you also must give due consideration to run-off cover.

Are payroll and CIS errors covered?

Cover: schemes have standard wordings; open-market can be tailored. Service: scheme claims handling is volume-driven; open-market with a broker offers a more bespoke claims experience. Renewal stability: schemes' rates can shift sharply if the underlying scheme insurer pulls back. A minimum-premium floor of £500–£900 dominates the smallest end of the market. Sole-practitioner premium is shaped by minimums, channel costs and first-year unknowns.

2.1 The principal UK accountancy bodies

Run-off should be budgeted for at 1.5–3× last live premium. What is the absolute minimum PI cover I must hold as a UK accountant? ICAEW and ICAS set 2.5 × gross fee income or £1.5m, whichever is the lower (capped at £3m on the formula); ACCA uses a banded scale starting at £100k for the smallest practices; CIOT, ATT and IFA use a similar £100k–£1m structure; AAT licensed members start at £50k. A multi-bodied firm complies with the highest applicable standard. Is PI cover legally compulsory or only regulatory? Again, Lockton can readily assist you (or the potential buyer) with this to ensure that past liabilities can be protected appropriately. Finally, and by way of immediate comfort to those accountants who are considering retiring from ongoing practices, there is better news: their past liability should continue to be covered by the firm’s PI policy on an ongoing basis. Often after retirement, many accountants continue to practise as consultants to the firm and the majority of PI policies will continue to provide cover for such work. Nevertheless, in each scenario, we strongly suggest that the policy wording be reviewed to make sure that cover is correctly in place; again, Lockton can help with this. Finally, if you have any questions, 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. Specialist insurance for accountants from £5 a month* Fast, easy online quote in 90 seconds Fast, easy online quote in 90 seconds Accountant insurance covers a great deal of risks that could face you and your business, but from professional indemnity insurance through to employers’ liability insurance policies and more – Markel have you covered.