Professional indemnity rates have seen a surprise fall, according to the latest UK PI Market report from Clyde and Co.

Over half of the respondents to the research expect 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.

Sam Godding, legal director at Clyde and 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."

Capacity may continue to dominate market trends in 2025 too. Almost a third 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, with 90% of respondents anticipating the number of PI claims will increase in the next two years. Three quarters 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.

Over 60% of respondents identified cyber and technology as the sector which will drive demand for PI cover in the coming months. However, Clyde and Co found market professionals are also increasingly concerned about the impact of AI on PI exposures – almost three quarters believe it will increase the risks of practice while 82% suggest inaccuracy and false information is their biggest concern around the technology.

Godding added: “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.”

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