Run-Off Cover and Professional Indemnity for High-Earning Professionals

Professional indemnity (PI) insurance protects professionals and their firms against claims arising from negligence, errors, omissions, or breach of professional duty in the performance of professional services. For many regulated professions, it is a legal or regulatory requirement — failure to maintain adequate PI insurance is grounds for suspension or deregistration. For high-earning professionals with significant personal assets, adequate PI cover is also one of the most important elements of personal financial protection.

This guide covers the PI landscape for the principal regulated professions, the critical distinction between claims-made and occurrence-based cover, run-off requirements, and the aggregation and excess-of-loss structures relevant to high-net-worth practices.

Who Needs Professional Indemnity Insurance?

PI insurance is relevant to any professional who provides expert advice or services for which clients pay and on which they rely. Regulatory requirements exist for:

Solicitors (SRA): The Solicitors Regulation Authority mandates PI cover for all SRA-regulated law firms. The minimum level of cover is £2 million per claim for sole practitioners, £3 million for other law firms. The SRA maintains a "participating insurer" regime — only SRA-approved insurers can provide complying PI for law firms. Cover must be on terms at least as broad as the Minimum Terms and Conditions (MTCs) set by the SRA.

Financial advisers (FCA): The FCA requires PI insurance as a condition of authorisation for firms undertaking regulated activities. The minimum cover level (as at the date of publication) is €1.25 million (approximately £1.05 million) per claim and €1.85 million in aggregate for insurance-distribution and investment business firms, with variations by activity type. For larger firms or those handling client assets, the FCA's CASS rules create additional considerations.

Accountants (ICAEW/ACCA/CIMA): Most professional accountancy bodies require their members and regulated firms to hold PI cover. The specific requirements vary by body — ICAEW firms must hold cover at least equal to 2.5x gross fee income or £250,000, whichever is higher. ACCA and CIMA have their own minima.

Doctors (medical negligence): Medical practitioners in private practice must hold appropriate medical indemnity cover. For private practitioners (as opposed to NHS staff covered by NHS Resolution), membership of a Medical Defence Organisation (MDO — Medical Protection Society, Medical Defence Union) or a commercial medical malpractice policy is standard. Award values in medical negligence are high and indemnity limits of £10–20 million per claim are common for surgical specialties.

Architects and surveyors (ARB/RICS): Architects registered with the Architects Registration Board (ARB) must hold PI cover. RICS-regulated surveying practices have mandatory PI requirements. Minimum levels depend on practice size; larger firms with significant project values should carry limits far above the regulatory minimum.

Consultants: Management consultants, IT consultants, engineers, and other specialists are not typically subject to statutory PI requirements but are strongly advised to carry PI cover and will frequently be contractually required to do so by clients.

Claims-Made Versus Occurrence-Based Cover

This is the most important conceptual distinction in professional indemnity insurance:

Claims-made policies — the standard basis for PI in the UK — respond to claims made against the insured during the policy period, regardless of when the alleged error or omission occurred (subject to the retroactive date). If the insured discovers a claim in 2026, the 2026 policy responds — even if the error was made in 2020.

Occurrence-based policies — far less common in UK professional indemnity — respond to the incident or act of negligence that occurred during the policy period, regardless of when the claim is made. If an error occurred during the policy period, the policy responds — even if the claim arrives years later.

Claims-made cover is the dominant basis for PI because it allows the insurer to know and price their liability at inception. For the insured, it creates a critical obligation: continuous, uninterrupted cover is essential. Allowing a PI policy to lapse — even for a short period — creates a gap through which historic claims could fall uncovered.

Retroactive Dates

Under a claims-made policy, the retroactive date is the earliest date from which alleged errors or omissions are covered. Acts of negligence occurring before the retroactive date are excluded, even if the claim is made during the current policy period.

For a professional who has been in continuous practice with PI insurance since qualification, the retroactive date should be set at the commencement of their professional practice — ensuring that a claim arising from advice given ten years ago is covered by the current policy.

When changing insurer, the new insurer should be asked to match the previous retroactive date. Failure to negotiate continuity of the retroactive date creates a gap: acts occurring between the original inception and the new policy's retroactive date are covered by neither the old policy (the claim was not made during its period) nor the new policy (the act occurred before its retroactive date).

Run-Off Cover

When a professional retires, closes a practice, or joins a firm that will not indemnify prior acts, run-off cover becomes essential. Run-off cover provides continuing PI protection for claims arising from work done before the practice closed, for a defined period following closure.

The standard run-off period mirrors the applicable limitation period for professional negligence claims — typically six years from the date of the act or omission (or, in cases involving latent damage not discoverable until later, the date of knowledge). For professions involving property (conveyancing) or long-term financial advice, run-off periods of six to ten years are standard.

The cost of run-off cover is typically expressed as a multiple of the last annual premium — often two to three times the final year's premium for a single-premium run-off policy. Factors affecting cost include:

• The nature and complexity of work performed
• Historical claims record
• The profile of clients served (institutional vs. private individuals)
• The run-off period required

Solicitors have specific run-off requirements under the SRA MTCs: the firm's last PI insurer must provide six years of run-off cover on closure, with the premium typically funded from the firm's assets. This is a non-negotiable requirement for SRA-regulated firms.

Aggregation Clauses

An aggregation clause defines whether multiple related claims are treated as a single claim (aggregated) or separately. The difference is significant when the limit of indemnity is on a per-claim basis:

Without aggregation: Each claim is subject to the full limit of indemnity. A firm facing 20 claims each valued at £200,000 would receive up to £200,000 per claim — £4 million in total — if the per-claim limit is £200,000.

With aggregation: If all 20 claims arise from the same act, error, or series of related transactions, they may be treated as a single claim subject to one limit — £200,000 in total. This dramatically reduces the protection available for systemic failures.

For professional practices with standardised products or processes — solicitors doing a high volume of conveyancing, IFAs advising many clients on the same product, accountants filing returns on a consistent methodology — the risk of multiple related claims from a single systemic error is real. The aggregation clause should be reviewed carefully; wider aggregation language (grouping more claims together) disadvantages the insured.

Excess of Loss Structures for High-Net-Worth Practices

Larger practices with high fee income and complex work face claims that can exceed standard PI limits significantly. A primary PI policy of £2 million may be entirely inadequate for a law firm conducting significant commercial transactions or a financial advisory firm managing HNW client assets.

Excess of loss (XL) or excess layer structures provide cover above the primary limit:

• Primary layer: £2 million (the base PI policy)
• First excess: £3–5 million in excess of £2 million
• Second excess (if required): additional limits above

The total tower of cover — primary plus excess layers — should be calibrated to the practice's maximum plausible single-incident exposure. For a conveyancing firm acting on a commercial property transaction worth £50 million, a PI tower of only £5 million creates a significant retained exposure.

XL layers are typically purchased on the London market (Lloyd's and company market), separate from the primary policy, and may be on different terms. Coordination between primary and excess layer wordings is important — gaps between layers should be eliminated.

Tail Cover and Retroactive Acts in Medical PI

Medical malpractice cover includes specific provisions relevant to surgical and clinical professionals. Procedures that create ongoing patient-management obligations (implanted devices, long-term treatment protocols) create PI exposure that extends well beyond the treatment date. Historic acts — a hip replacement performed in 2018 that fails in 2026 — must be covered.

MDOs and commercial medical malpractice insurers both provide this tail coverage, but the terms of cover on retirement or cessation of practice should be confirmed explicitly. Surgeons and specialists with high-risk procedure histories should seek specific confirmation of the run-off terms and limits available on retirement.

Important: Regulatory requirements for PI vary by profession, jurisdiction, and regulatory body, and change periodically. Minimum limits described in this guide are as at the date of publication. Professionals should verify current requirements directly with their regulatory body and obtain independent advice on the adequacy of their PI programme.

How Global Investments Can Help

Global Investments advises high-earning professionals on professional indemnity insurance as part of a comprehensive financial protection review. We review current PI arrangements for adequacy of limits, retroactive date continuity, run-off provisions, and interaction with personal financial planning.

For professionals with significant personal wealth, we ensure that PI cover is adequate to protect both the practice and personal assets — and that run-off arrangements are in place for retirement or career transitions. We access the specialist professional indemnity market for regulated professions including law, financial services, medicine, accountancy, and architecture.

Contact our protection team to discuss your professional indemnity requirements.