July 2026 Market Analysis

Our latest snapshot market analysis shows the UK Professional Indemnity (PI) insurance market remains competitive, with increasing insurer appetite, softer pricing and improved capacity across many sectors. At the same time, the cyber insurance market continues to experience rising claims despite competitive premiums, making cyber protection increasingly important.

Professional Indemnity Insurance Market

The PI market continues to soften following several years of hard market conditions. Increased competition between insurers has resulted in lower premiums, greater underwriting flexibility and improved terms for well-managed businesses with favourable claims histories.

Construction

PI for the construction sectors has shown some of the strongest signs of improvement, with increased insurer capacity and reduced renewal rates for quality risks. Nevertheless, underwriters remain cautious around fire safety, cladding, collateral warranties and design-and-construct exposures.

Regulated Professions

Surveyors and solicitors continue to face strict professional indemnity requirements. RICS has reinforced its minimum insurance standards, including clarification around consumer run-off cover and the importance of using appropriately rated insurers. Solicitors' PI also remains a specialist market where broker relationships and quality presentations continue to add significant value. Accountants are enjoying significant softening in their insurance rates due to high levels of insurer competition, although large claims against accountants are an ever present risk.

Cyber Insurance

Cyber insurance remains one of the fastest-growing commercial insurance sectors. Although premiums remain competitive due to increased insurer capacity, claims continue to rise significantly.

The Associate of British Insurers (ABI) reported that UK insurers paid almost £ 200 million in cyber claims during 2024—more than three times the previous year—with ransomware and malware responsible for over half of all claims. While the paid cyber claims is a high number, it suggests to us that most UK businesses still do not purchase this cover.

Several high-profile cyber attacks over the past year, including those affecting major UK retailers, have demonstrated that cyber incidents can lead to prolonged business interruption, reputational damage and substantial financial losses despite insurance recoveries.

Regulation and Emerging Risks

The UK Government continues to strengthen cyber resilience through the proposed Cyber Security and Resilience Bill, which is expected to expand incident reporting requirements and increase expectations around cyber governance.

The Government is also progressing measures designed to reduce ransomware payments, while the FCA has identified cyber insurance as a key regulatory priority.

Artificial Intelligence is emerging as another developing exposure. As more professional firms adopt AI tools, insurers are increasingly considering how AI-assisted work may affect professional liability and cyber risk.

Major Stories Affecting the PI Market

AI "Hallucination" Court Cases Continue

One of the biggest talking points across the insurance market has been lawyers and professionals relying on generative AI that fabricated case law and legal authorities. Several UK insurers and law firms published guidance in June warning that this is now a genuine Professional Indemnity exposure. Underwriters are beginning to ask insureds how AI is being used within their businesses and what controls exist. Potential claims include:

• negligent advice
• negligent drafting
• missed legal arguments
• inaccurate reports
• professional reliance on false or incorrect AI output

Solicitors PI Capacity is Still Under Pressure

Although rates have generally softened, a survey highlighted that around 38% of insurers have considered reducing or exiting the solicitors PI market, largely because of ongoing profitability concerns.

The Risk of AI Becomes an Underwriting Question

Throughout May and June there was a noticeable increase in insurers publishing guidance and asking:

• Does the policyholder use AI?
• Who reviews AI output?
• Are humans signing off the advice?

This is clearly becoming one of the biggest emerging PI underwriting themes of 2026.

Conclusion

The PI insurance market currently offers favourable conditions for clients, but the broker's expertise remains essential in ensuring cover is appropriate rather than simply a lower cost. Meanwhile, cyber risk continues to increase despite competitive premiums. Regulatory developments, ransomware activity and the growth of AI mean that cyber insurance is becoming an increasingly important part of risk management for professional firms and a mainstream insurance purchase.

 

This insight is intended for information purposes only. It is not and does not purport to be legal advice or specific insurance advice. Whilst all care has been taken to ensure its accuracy at the time of writing it is not to be regarded as a substitute for specific advice. If you require specific advice, please contact your brokers or call us on 0345 251 4000. This guidance note shall not be reproduced in any form without our prior permission. © All copyright is owned by Professional Indemnity Insurance Brokers Ltd.