ICAEW PII regulation update

The Institute of Chartered Accountants in England and Wales (ICAEW) has introduced new Professional Indemnity Insurance (PII) regulations which will take effect from 1 September 2024.

The changes follow the ICAEW’s review of the professional indemnity insurance requirements for its members, to ensure they are reflective of the significant changes seen in the PI insurance market in recent times and the importance of PII in the public interest. This review also included a public consultation which closed in December 2023.

The ICAEW have highlighted the following main changes that will come into effect from 1 September 2024:

• The minimum limit of indemnity will increase from £1.5m to £2m.
• For firms with a gross fee income which is below £800,000, the limit will be two and a half times the firm’s gross fee income, subject to a minimum of £250,000 (this is an increase from £100,000).
• Larger firms with gross fee income over £50m will not be required to put in place ‘qualifying insurance’ but must have in place appropriate arrangements which will be monitored. (Currently this approach is available to firms with 50+ principals.)
• For firms that will be required to put qualifying insurance in place, the maximum aggregate excess should not exceed the higher of £3,000 or 3% of a firm’s gross fee income.

What should you do?

The new arrangements will apply to policies taken out or renewed from 1st September 2024.

We suggest consulting your broker to determine if any of the changes will affect your policy and to ensure you allocate ample time to prepare for your renewal this year.

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 ICAEW website.