Prime Highlights-
- UK law firms are spending a smaller share of revenue on professional indemnity insurance amid strong insurer competition.
- Mid-sized firms recorded the biggest savings, while longer-term policies and co-insurance gained momentum.
Key Facts-
- Professional indemnity insurance costs fell by an average of 11%, with firms earning £5–10 million seeing savings of over 15%.
- Lockton expects competitive pricing to continue, although insurers will closely assess firms’ cyber resilience and risk management.
Background-
Law firms across the UK are spending a smaller portion of their revenue on professional indemnity insurance, with mid-sized firms benefiting the most, according to a new report from insurance broker Lockton.
The report found that firms turning over between £5 million and £10 million saw their insurance costs drop by more than 15% as a share of revenue during 2025/26.
Larger firms with turnovers above £25 million saw a smaller reduction of around 12%, while the average fall across all firms stood at 11%.
Lockton, which advises roughly 1,600 law firms, said strong competition among insurers has driven the trend. New insurers keep entering the legal market, pushing established players to defend their position through more competitive pricing, particularly for primary insurance cover.
More firms are also choosing to lock in longer insurance terms. Over a quarter of firms surveyed took out policies lasting 18 months rather than the standard 12, up from one in five the previous year.
Lockton linked this shift to growing insurer confidence in the sector and firms wanting to secure good rates while conditions remain favourable.
The report also pointed to a sharp rise in co-insurance arrangements, where multiple insurers share the risk on a single policy.
Just 7% of firms used this kind of arrangement in 2023/24. That figure jumped to 23% in the latest year, and insurers are now extending the option to smaller firms as well, not just larger ones.
Pricing trends may look positive, but Lockton flagged cybersecurity as one of the sharpest risks law firms face right now. Other concerns on the list include artificial intelligence, staff burnout and firms expanding too quickly without the right safeguards in place.
Looking ahead, the broker expects insurers to keep competing hard over the next two years. That said, firms growing rapidly or changing their business models can expect closer scrutiny from insurers before renewal.
