The latest report from Clyde and Co offers insights into the level of PI claims, legal costs, rates and more in 2025;
2024 was forecast as another year of stabilisation, instead, rates have fallen at a speed which has surprised many, according to the fourth edition of the UK PI Market report from global law firm, Clyde & Co.
The report surveys PI market professionals, including underwriters, claims managers and brokers. It found that 56% of respondents expected there to be a levelling off of the market after two years of increases – with zero rates increases in 2024. However, rates have subsequently fallen at unprecedented speeds, driven by the entry of new carriers or MGA capacity.
Mounting claims severity
Capacity may continue to dominate market trends in 2025 too. Almost a third (31%) of respondents expect capital allocation to be the most important structural influence on the volume of PI business written in the UK over the next 12 months.
While capacity within the market is growing, so too are claims numbers, according to respondents – 90% believe the number of PI claims will increase in the next two years. Three quarters (74%) believe the severity of claims will also increase during this period, making disciplined risk selection and risk management services essential for insurers looking to remain competitive in a difficult market.
Unstoppable AI
Over 60% of respondents identified cyber and technology (including AI) as the sector which will drive demand for PI cover in the coming months. However, Clyde & Co found market professionals are also increasingly concerned about the impact of AI on PI exposures.
Almost three quarters (72%) believe AI will increase the risks of practice while 82% suggest inaccuracy and false information is their biggest concern around the technology.
Regional PI powerhouses
Outside of London, PI claims handling and underwriting hubs are growing at pace. Twenty-nine per cent of respondents expect to see growth in these roles in the South of England over the next 12 months while 50% anticipate growth in the North of England – fuelled by client demand driven by the significant construction projects and professional sector development in key cities.
Scotland, Wales and Northern Ireland present more complex pictures, as significant growth opportunities are balanced against political uncertainty and the intricacies of devolved government.
Sam Godding, Legal Director at Clyde & Co said: “The PI market is being tested again. But amidst the uncertainty, transformation within the sector is bringing significant opportunity. A capacity-driven market offers the chance for growth and competitive pricing, but it also requires a deep understanding of risk. With reduced room to rely on traditional levers such as coverage restrictions and higher premiums, risk management is becoming critically important.
The ability to demonstrate clear, quantifiable steps to reduce exposures and stay abreast of developing regulations and risks will be increasingly prized within the sector. It will be an interesting year ahead as we await the market’s response to these new tests.”
The full report can be read here.
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