The claims trends in solicitors’ PII every law firm should be aware of
Janine Parker, executive director at Gallagher, outlines the latest trends seen in the insurance market as evolving cybersecurity threats, intensifying regulations and emerging AI-related risks leave law firms vulnerable to danger
The UK solicitors’ professional indemnity insurance (PII) market has faced multiple headwinds in recent years, reflecting challenging economic conditions, technological disruption and shifting legal risks. While the pricing environment has softened due to increased insurer capacity and competition, the underlying claims landscape has become more complex, driven by consistent long-standing claims causes and emerging risk exposures.
Increasing severity and complexity
One of the most notable developments is the rising severity of claims. Insurers are reporting a growing number of high-value losses, with multiple claims exceeding £1m. These large losses are increasingly hitting excess layers and exhausting limits.
The rise in severity is partly due to inflation, higher legal costs and increased damages awards. This trend is not exclusive to solicitors’ PII but is also evident across the wider PII market, where these issues continue to push up loss ratios.
Claims are also becoming more complex. Multi-party disputes, class actions, and large-scale litigation are increasingly common, often involving multiple defendants and intricate legal arguments. About 30% of PII claims range from £1m to £50m, underscoring how larger claims shape overall PII market performance.
Areas of practice trends
Claims trends remain concentrated in specific practice areas, especially property and private client work. Residential and commercial property transactions generate a high volume of notifications. Wills, trusts, and probate matters have also faced greater scrutiny following Covid-19 and the cost of living crisis.
Property work is vulnerable due to its transactional nature, high values and fraud risk. Errors in precedents or process failures can cause systemic claims affecting multiple transactions. The sharp rise in cyber-enabled fraud, like intercepted emails and fraudulent bank details changes, has further increased risk.
Private client work has also seen more litigation. Rising asset values and complex family structures have driven disputes over inheritance and undue influence, leading to more frequent notifications and potentially contentious claims against solicitors.
Cyber risk and fraud
Cyber risk has become a major evolving threat in solicitors’ PII. Law firms are prime targets for cybercriminals because of the sensitive client data and financial transactions they handle. Phishing, social engineering and email interception scams often cause financial losses. With new AI-generated attacks, firms face battles on multiple fronts.
The boundary between PII and cyber insurance is increasingly blurred. A data breach or cyber incident can simultaneously trigger liabilities under both policies, particularly where a claim involves negligent handling of client information or failure to prevent fraud. Stringent regulatory requirements also need to be factored in.
Insurers are paying closer attention to firms’ cyber resilience, and policy wordings are evolving to clarify the distinction between cyber and professional liability exposures. The growing importance of cyber risk influences underwriting, with firms pressured to demonstrate robust controls.
Regulatory and conduct-related exposures
Another key trend is the rise in regulatory and conduct-related exposures. The regulatory environment for solicitors continues to intensify, with the Solicitors Regulation Authority (SRA) conducting more frequent and complex investigations.
Claims arise not only from traditional negligence but also from compliance failures, anti-money laundering (AML) breaches, and client money-handling issues. There is increasing scrutiny of professional conduct and ethical standards. Insurers emphasise governance, supervision, and internal controls, especially given high-profile firm failures and regulatory interventions.
The impact of technology and AI
Technology is reshaping the claims landscape positively and negatively. Digital tools and AI can improve efficiency and reduce human error, but also introduce new risks.
AI-related liability is an emerging concern, especially when automated tools produce inaccurate or misleading outputs. Courts have cautioned against over-reliance on these systems, highlighting the need for human oversight in legal advice.
The increased adoption of technology has expanded firms’ risk exposure. Data breaches, system failures, and reliance on third-party platforms create new avenues for claims. Insurers are refining policy coverage and developing new products to address these exposures.
Frequency trends and market dynamics
While severity has increased, claim frequency trends are more nuanced. Some data suggests overall claim volumes have stabilised or fallen in certain areas, partly due to more use of alternative dispute resolution and improved risk management.
However, other indicators point to a resurgence in claims activity, driven by economic conditions, client expectations, and growing willingness to pursue litigation. There is also evidence that claims and complaints are rising from a broader range of stakeholders, including third parties.
For insurers, this creates a paradox: a competitive underwriting environment with falling premiums, alongside a riskier and more unpredictable claims landscape.
Future outlook
Several themes are likely to shape the evolution of solicitors’ PII claims:
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Technology-driven risk: AI, cyber threats, and data-related liabilities are set to dominate.
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Economic pressures: Inflation and financial volatility will continue to increase claim costs and litigation activity.
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Regulatory expansion: Ongoing changes in legal regulation will generate new exposure areas for firms.
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Complex litigation: Multi-party and high-value disputes are expected to become more prevalent.
Insurers face the challenge of balancing competitive pricing with disciplined underwriting and effective risk selection, while law firms must focus on robust risk management, especially in high-risk areas like property work, cybersecurity, and regulatory compliance.
As the profession adapts to these changes, both insurers and insureds must remain agile. Understanding and anticipating claims trends will be critical to managing risk effectively.
The information provided in this article is for general informational purposes only and does not constitute legal, financial, or professional advice. While we have made every effort to ensure the accuracy and reliability of the information presented, readers are encouraged to consult with qualified legal, insurance, or risk management professionals to obtain advice tailored to their individual needs and circumstances.
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.
