SRA minimum terms and conditions
Every SRA-authorised firm must maintain qualifying professional indemnity insurance under the SRA's Minimum Terms and Conditions (MTCs). The key requirements are:
- Minimum cover per claim: £2 million for most firms. The minimum rises to £3 million for firms carrying out conveyancing or probate work, reflecting the higher value of transactions and the aggregated claim exposure in those areas.
- Qualifying insurer: cover must be placed with a qualifying insurer on the SRA's list. Insurers not on the list do not satisfy the MTCs, regardless of the level of cover they offer.
- Each and every claim basis: the £2 million (or £3 million) limit applies to each and every claim, not as an aggregate. An aggregate limit would be non-compliant.
- Excess and defence costs: the MTCs do not cap the amount of the excess a firm can carry, but they restrict how it can be applied. The excess cannot apply to defence costs, and it cannot erode the limit of indemnity. Defence costs are payable in addition to the limit, with no separate monetary cap.
- Run-off cover: when a firm closes, it must maintain run-off cover for at least six years. Run-off cover insures claims arising from work done before closure that are notified after the firm has ceased to practice.
Run-off cover: the cost firms underestimate
Run-off cover is consistently one of the most underestimated costs in law firm closure planning. The premium for run-off cover is typically 2.5 to 3 times the last annual premium. For a firm paying £40,000 a year for PII, run-off cover for the mandatory six-year period could cost £100,000 to £120,000 as a lump sum at the point of closure.
The obligation falls on former principals (partners, members or directors, depending on the structure) who were principals at any point during the covered period. This means principals who left the firm before closure may share responsibility for the run-off premium even if they are no longer involved in the business. Firms should address this in their LLP agreement or partnership deed: who bears the run-off cost, and on what basis.
Run-off cover is usually placed with the same insurer as the final year of cover, though some insurers offer standalone run-off products. A firm that cannot obtain PII at renewal does not have an insurer of last resort to fall back on: the SRA abolished the Assigned Risks Pool in October 2013. Instead, the firm enters an Extended Policy Period under its existing insurer, made up of a 30-day extended indemnity period (during which it can carry on practising while it seeks cover) followed by a 60-day cessation period (during which it can act only on existing matters and must work towards an orderly closure). Run-off cover is triggered at the end of that process, so a firm heading into a distressed closure needs to plan for the run-off premium well before the extended period runs out.
Premium benchmarks by practice area
PII premiums vary significantly by practice area. The figures below are indicative benchmarks expressed as a percentage of gross fee income for 2026, based on open-market conditions. Individual firms will see material variation above or below these ranges depending on claims history, supervision quality and risk controls.
| Practice area | Typical premium range (% of gross fees) |
|---|---|
| Conveyancing | 3.5% to 6% |
| Commercial property | 2.5% to 4% |
| Personal injury | 2% to 4% |
| Family | 1% to 2.5% |
| Corporate and commercial | 1% to 2% |
| Employment | 0.8% to 1.5% |
| Private client and wills | 0.5% to 1.2% |
Conveyancing carries the highest loading because it combines high transaction values (especially in southern England), title risk, and significant fraud exposure from social engineering and conveyancing fraud. A conveyancing firm with a claims history involving fraud losses will sit at the top of the range or above it.
Personal injury sits high despite relatively low per-claim values because of volume: high-frequency claims generate claims management costs even when individual awards are small.
Private client and wills attract the lowest rates in a typical mixed practice. The claims that do arise (contested wills, negligent estate administration) tend to be infrequent and, outside very large estates, not catastrophically valued.
Key rating factors
Underwriters assess each firm individually against a set of factors that drive premium loading or discount. The main factors are:
Claims history (last five years): the single largest driver of premium. A firm with a clean five-year record will typically attract the most competitive terms. A single significant claim can add 30 to 60% to the renewal premium. Multiple claims or a large unresolved matter in the pipeline may reduce the number of qualifying insurers willing to quote, concentrating the market and pushing premiums higher.
Practice area mix: a firm with 80% conveyancing will be rated very differently from one with 80% employment and private client work, even if fee income is similar. Underwriters look at the proportion of total fees attributable to high-risk areas.
Conveyancing volume and average transaction value: for firms with conveyancing exposure, the number of transactions per year and the average property value both matter. High-volume, high-value conveyancing (London residential in particular) attracts the most aggressive loading.
Supervision ratios: the ratio of qualified solicitors to support staff and the supervisory structure of the firm. Lean supervision ratios and high staff turnover are risk factors underwriters price for.
File review frequency: firms with documented, regular file reviews (quarterly or better) present a better risk than those without. Some insurers offer modest premium reductions for CQS (Conveyancing Quality Scheme) accreditation, which requires file review as part of the standard.
Locum and third-party fee-earner use: heavy use of locums without adequate supervision controls is a risk factor. Freelance solicitors working under the SRA's individual authorisation rules rather than the firm's cover add complexity.
The qualifying insurer market
The SRA maintains a list of qualifying insurers who meet the financial strength and policy-terms requirements to provide compliant PII cover. The market includes Lloyd's of London syndicates and a number of specialist insurers, including Travelers, QBE, Aviva, XL Catlin and others.
The number of qualifying insurers willing to quote in any given year varies with market conditions. Periods of significant claims in the legal sector (for example, following large-scale conveyancing fraud events) typically lead to market hardening: insurers tighten terms, increase premiums and withdraw from certain segments. Firms that do not shop the market actively at renewal may find they are significantly overpaying relative to alternatives.
The renewal window opens 60 to 90 days before the SRA's annual renewal deadline (currently 1 October for most firms, though check the SRA's current schedule). Leaving renewal until the last four weeks substantially reduces the number of insurers who will quote and gives the firm little time to negotiate.
Mid-term adjustments
PII policies typically require notification to the insurer if fee income grows materially beyond the figure declared at inception. Most policies define this as growth of more than 10% above the estimate used to calculate the premium. Failure to notify can affect the validity of cover in the event of a claim.
If a firm takes on a significant new matter type after renewal (a conveyancing practice that begins to take on commercial property work, for example), notify the insurer. The underwriter may reprice or may accept the change within existing terms, but undisclosed changes to the risk profile are a coverage concern.
Aggregation clauses
The SRA's minimum terms include an aggregation clause: multiple claims arising from a series of related acts or omissions may be aggregated and treated as a single claim for the purpose of applying the limit. This means that if a systemic error in a firm's conveyancing process generates 20 claims, all 20 may be aggregated and the £2 million (or £3 million) limit applies once across all of them, not once per claim.
Aggregation is most relevant for firms with high-volume practice areas where a single process error can generate multiple claims. It is important to understand how the aggregation clause in your specific policy interacts with the SRA's requirements.
Cost-reduction strategies
The following measures have a demonstrable effect on premium levels, particularly at renewal:
File review programme: a documented quarterly file review programme that generates a report showing the number of files reviewed, issues identified and actions taken. Underwriters view this as evidence of active risk management.
Conveyancing Quality Scheme (CQS): CQS accreditation, administered by the Law Society, signals to underwriters that the firm operates a quality-assured conveyancing process. Some insurers apply a premium discount for CQS-accredited firms.
Conveyancing fraud controls: documented controls for the main fraud vectors (email diversion, identity fraud, land banking schemes). Firms that can evidence controls typically achieve better terms than those that cannot. Bank account change confirmation calls, dual-authorisation for large transfers and client verification processes are the basics.
Excess optimisation: consider whether a higher voluntary excess reduces the premium enough to justify the retained risk (the excess cannot apply to defence costs, but a firm can agree a higher self-insured excess on the indemnity itself). This is a firm-by-firm calculation; the appropriate answer depends on the claims history and the firm's ability to absorb a self-insured loss.
Market-testing at every renewal: placing the risk with multiple brokers who access different parts of the qualifying insurer market is the single most reliably effective cost-control measure. Broker loyalty can be expensive in a market where insurer appetite varies significantly from year to year.