Professional Indemnity Insurance: retroactive dates and IPA requirements for Insolvency Practitioners

IPA Insolvency Practitioner newsletter, January 2025

Article by Thomas Fahey, Associate, Lockton.


Ensuring compliance and comprehensive cover

For insolvency practitioners, Professional Indemnity Insurance (PII) is not only vital for protecting your practice, but is also a regulatory requirement under the Insolvency Practitioners Association (IPA). A key aspect of compliance is ensuring your policy’s retroactive date aligns with the IPA’s rules, safeguarding your liability for past acts or omissions.

This article explains retroactive dates, their importance, and how to ensure compliance with IPA regulations.

What is a retroactive date?

The retroactive date in a PII policy determines how far back your coverage extends for claims arising from past work. Claims related to work completed before this date are excluded from your policy.

IPA Regulation 6 requires insolvency practitioners to maintain retroactive cover for at least six years prior to the policy commencement date or, if shorter, since the date you first held an insolvency appointment. This ensures that potential claims arising from past work are covered, protecting both you and your clients.

Key IPA requirements for retroactive cover

Under IPA Regulation 6, your PII policy must meet the following criteria:

  1. Coverage for the period of insolvency appointments – Your policy must provide adequate cover for the duration in which you hold insolvency appointments.
  2. Six-year retroactive cover – Your retroactive date must extend at least six years prior to the start of the policy, or to the date you first held an insolvency appointment, whichever is more recent.
  3. Cover across multiple firms – If you have worked at more than one firm within the last six years, your policy must cover past acts or omissions at each of your former and current firms.
  4. No gaps in cover – The required period of cover may be achieved through consecutive annual policies, provided there are no gaps in coverage.

Types of retroactive dates

Your policy’s retroactive date may be described in one of the following ways:

  • Unlimited retroactivity or retroactive date: none
    Full retroactive cover ensures claims are covered regardless of when the work was performed. This is the most comprehensive option.
  • Specified retroactive date
    Example: Retroactive date: 1 January 2018. This provides cover for work conducted after the specified date but excludes prior activities. Ensure this date aligns with IPA regulations.
  • Retroactive date inception (RDI)
    This limits coverage to work performed after the policy’s start date. Such policies are generally unsuitable for insolvency practitioners due to the risk of non-compliance with IPA regulations.

Ensuring compliance

To meet IPA requirements and ensure your retroactive cover is sufficient:

  • Check the retroactive date on your policy – Verify that your policy’s retroactive date meets the six-year minimum or the date you first held an insolvency appointment, whichever is shorter.
  • Review past firm coverage – If you’ve worked at multiple firms, confirm your policy covers acts or omissions at all relevant firms during the past six years.
  • Avoid gaps in cover – Ensure there is no lapse between consecutive policies. Gaps in cover may leave you non-compliant and exposed to liability.
  • Consult your insurer or broker – If your policy does not comply with IPA requirements, discuss adjustments with your insurer or broker. Be aware that changes to your retroactive date may result in additional premium charges.

Key considerations when renewing your policy

  • Changing insurers or brokers – Review the retroactive date carefully to ensure continuous compliance with IPA regulations. Be cautious of competitive premiums that may come with restrictive retroactive clauses.
  • Document retention – Retain evidence of past policies to demonstrate continuous coverage if required. Contact previous insurers for copies if needed, though this may incur an administration fee.

Conclusion

At Lockton, we specialise in providing tailored PII solutions for insolvency practitioners. We work closely with you to ensure your retroactive cover is compliant with IPA requirements, giving you peace of mind and robust protection for your practice.

If you have questions about your retroactive date or need assistance in reviewing your PII policy, get in touch with our expert team. We’re here to help you navigate the complexities of professional indemnity insurance so you can focus on your clients and your practice.

For more information, please contact: thomas.fahey@lockton.com.

Please note that guest content does not necessarily represent the views of the IPA.