Terms & Conditions

Again, Lockton can readily assist you (or the potential buyer) with this to ensure that past liabilities can be protected appropriately.

What Level of Professional Indemnity Insurance Do I Need?

He and his team support financial and construction professionals with insurance, risk mitigation, and claims management. With significant changes taking place in the insurance market in recent times, the ACCA have reviewed their current Professional Indemnity Insurance regulations and have endeavoured to improve and modernise these requirements to be more in-line with current trends. The new Professional Indemnity Insurance (PII) regulations will come into effect on 1st September 2023. For income up to £600,000 the PII limit must be two and a half times the firm’s relevant total income; and with a minimum limit of £100,000. If total fee income is greater than £600,000 then PII limit must be at least £1.5 million (the limits should be applied in local currency equivalents) The largest fee multiplier, of twenty-five times, 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 These changes come into effect on 1st September 2023.

Storage of papers and documents

Members will be given a 4-month period to adjust or obtain cover which is compliant with the new regulations. Renewal on or after 1st January 2024 must comply with the new requirements. Some of the changes implemented will be welcomed by both the insurers, brokers and members, for example the removal of the largest single fee multiplier, which often meant having to hold high limits of indemnity which was not necessarily reflective of the risk associated with the assignment nor the fees received from the work. Another positive change is the increase in the minimum limit of indemnity from £50,000 to £100,000. With the current cost of legal fees, a limit of £50,000 isn’t really enough. 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.

E-E-A-T and disclosure

High risk exposures are now being allowed on an aggregate basis. This means that more insurers will be bet betting websites with sign up bonus comfortable providing cover knowing that their exposure is limited, rather than declining cover all together. For ACCA members it means they will have more options in the market and therefore are not left without cover or having to apply for a waiver from the ACCA which can often be a long drawn -out process. However, the requirement for increased fidelity guarantee insurance (FGI) may limit the market for members as insurers are worried about the rise in internal fraud and therefore may not want to increase their exposure. The insurer may insist that the client takes out a separate Crime policy, which will cover the FGI, as they may not want to add this into their PII policy.

3.6 Subsidiary undertakings, networks and overseas branches

This will potentially mean the members having to obtain two separate policies to comply with the ACCA’s regulations. A surprising absence in the updated regulations is the need for members to hold cyber insurance. Cyber crime has increased exponentially and significantly affects professions such as accountants who can hold a large amount of client personal data. The cover provided under Professional Indemnity policies can be very limited and, in most cases, will not be adequate should a cyber incident occur. Yes, you will need to find out if your insurer will be updating their policy and your cover to ensure that it is compliant with the new requirements. 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.

• Minimum indemnity limit typically £50,000 for members in practice
• Cover must be provided by an insurer authorized in the UK
• Policy must cover civil liability from professional business activities
• Run-off cover required upon retirement or cessation of practice

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.

9. IFA Practising Certificate PI requirements

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. 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. Finally, if you have any questions, please contact your Lockton account manager for further advice or email accountants@uk.lockton.com.

How much does accountants insurance cost?

If not, then your broker will need to find compliant cover elsewhere. 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. 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.

14.1 The policy backdrop

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 bet best betting app uk casino 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. 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

• Proof of insurance must be submitted annually to ACCA
• Failure to maintain insurance can lead to disciplinary action
• ACCA may request a certificate of insurance at any time
• The policy must be in the name of the firm or sole practitioner
• Cover must be continuous with no gaps

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.

Which Firms Provide PII Insurance for Accountants?

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. 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. Should you be considering the sale of your practice, you also must give due consideration to run-off cover. Accountants insurance is an important form of business insurance designed to protect your business against the unexpected.

PII Limit of Insurance Tables for Accountants

Although there are a number of amendments, we have outlined below those that we see as most notable. The minimum limit of indemnity has increased from £50,000 to £100,000. This mirrors the minimum level for ICAEW members. The ‘twenty-five times the largest fee’ multiplier has been removed to calculate PII limits and instead has been replaced with new bandings: For firms generating income under £600,000, the PI limit needs to be the greater of two and a half times the relevant total income or £100,000For firms generating income in excess of £600,000 the minimum limit of indemnity is set at £1.5Million. For firms generating income under £600,000, the PI limit needs to be the greater of two and a half times the relevant total income or £100,000 For firms generating income in excess of £600,000 the minimum limit of indemnity is set at £1.5Million.

16.2 The typical sole-practitioner cost band

Where firms have (in some cases) needed to purchase significant limits on their PII policy, the changes in regulation mean that they may now be able to purchase a lower limit moving forwards – which could help to reduce the costs of their PII policy. Combine this with signs of a softening market, this will be welcome news for ACCA member firms. If you would like to discuss this topic further and understand the implications this may have on your firm, please don’t hesitate to contact the team. In the meantime, you can find out more about the new regulations on the ACCA website. Paul has 25 years’ experience securing Professional Indemnity insurance for his clients. It’s worth noting that it’s not a single product, but rather a group of covers that can be tailored to suit you and your business needs.

Firm/Individual Category	Minimum Limit per Claim (GBP)	Aggregate Limit (GBP)	Basis of Calculation
Sole Practitioner	100,000	1,500,000	Annual Fee Income
Partnership (2-5 partners)	500,000	3,000,000	Aggregate Fee Income
Corporate Practice	1,000,000	5,000,000	Turnover & Risk Profile
Insolvency Licence Holder	1,500,000	10,000,000	Statutory Requirement

It can protect you against the costs involved in defending allegations of professional negligence (such as making a mistake in a piece of work), causing injury to a third party, or damage to vital equipment (or property) you use for business.

Type of Breach	Potential Disciplinary Action	Impact on Practice
No valid PII in place	Suspension of practising certificate; fines.	Cannot offer services to public.
Inadequate cover limits	Directed to rectify; possible conditions on licence.	Increased personal liability risk.
Failure to disclose claims	Investigation; potential finding of misconduct.	Policy may be voided; reputational damage.
Using an unapproved insurer	Required to switch provider; licence review.	Cover may not be recognised.