The October 2025 professional indemnity insurance (PII) renewal period has brought notable changes for law firms, according to insights from Howden.
The market currently holds a record 37 participating insurers for the 2025/26 indemnity year, the highest number to date and a marked increase from the 26 listed when the hard market began in 2019.
Howden reports that this expanded capacity has resulted in heightened competition among insurers, with many seeking to attract new business and retain existing clients. Most incumbent insurers have shown a willingness to match improved terms offered by competitors to maintain their portfolios.
Flexibility in underwriting has continued, especially regarding higher-risk practice areas, though firms with a high proportion of conveyancing or those involved in high-volume consumer claims remain less attractive to insurers.
Professional indemnity insurance continues to represent a significant cost for law firms, even as market conditions improve. According to previous industry analysis, PII premiums typically account for between 3% and 9% of a solicitor firm’s annual turnover, with a median of 5%. For a practice generating £1 million in revenue, this means an annual PII outlay of around £50,000.
Premium rates have generally decreased for the majority of Howden’s clients, particularly for those who have demonstrated an improved risk profile following previous claims. However, Howden notes that a reduction in rate does not always translate to a lower premium, as overall gross fees remain a key pricing factor. Firms experiencing significant growth in gross fees may still see higher premiums despite lower rates.
The trend towards longer-term policies has persisted, with most insurers offering standard policy periods of 18 months. Howden observes that even firms projecting substantial fee income growth are being offered these extended terms, which can provide greater financial certainty and reduce administrative workload.
In the excess layer market, capacity has also increased, leading to further rate improvements. Many firms securing up to a £10 million combined limit of indemnity have achieved savings on excess layer premiums. For limits above £10 million, premiums have remained stable, reflecting historically low claims activity at these levels.
Howden advises that excess layer policies are not subject to the Solicitors Regulation Authority’s Minimum Terms and Conditions, so firms should seek tailored advice to ensure appropriate coverage.
Premium financing remains a mixed landscape. Some firms continue to face challenges in securing finance due to stricter lending criteria and more detailed information requirements from credit providers.
However, firms with stronger credit profiles have been able to secure more competitive rates. Howden has observed a trend of clients with 12-month policies opting to pay premiums in full, while those with longer policy periods are more likely to use financing.
Cyber insurance uptake among law firms has increased, though overall adoption remains low. Howden attributes a slight reduction in premiums to new market entrants, despite a rise in claims activity. The firm notes that the threat of cybercrime continues to be significant for the legal sector.
The integration of artificial intelligence into legal practice has prompted underwriters to include questions about AI usage in proposal forms. Insurers are focusing on how AI is deployed, governance policies, and staff training. While there have been no major claims related to AI so far, Howden expects this to change as adoption grows.
Proposal form requirements have eased, with most insurers accepting short-form declarations instead of lengthy documents. Howden anticipates this approach will continue into 2026, though full proposal forms are still typically required every three years for a comprehensive risk assessment.
Howden concludes that the 2025 renewal season has been positive for law firms and expects current trends to continue into the next cycle.
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