Can AI Reduce a Conveyancing Firm's Professional Indemnity Risk? What the SRA Minimum Terms Say

I found no SRA or insurer statement saying that using artificial intelligence (AI) changes the cover a conveyancing firm gets under the Solicitors Regulation Authority (SRA) minimum terms for professional indemnity insurance (PII). My view is that AI can help a firm catch claim-causing errors, such as missed lender reporting, but only with human checks around it. Ask your insurer in writing how your policy treats AI.

I am Chief Operating Officer of Lex Sentinel, which builds AI tools for conveyancers, so I have an interest in this question. This is general information for SRA-regulated firms in England and Wales, not legal or insurance advice, and the definitions in the minimum terms depend on your firm's structure, so speak to your broker before changing how you work.

What cover does an SRA-regulated firm have to hold?

An SRA-regulated firm must hold qualifying insurance on the SRA's minimum terms and conditions, with a limit of at least £3 million for any one claim for relevant recognised or licensed bodies and £2 million in all other cases. The terms sit in Annex 1 of the SRA Indemnity Insurance Rules. Clause 1.1 requires cover for civil liability arising from private legal practice, and clause 1.2 extends it to defence costs.

The rules also set out what happens at renewal. A firm must have cover with a participating insurer (rule 2.1) and must have it in place before the old policy expires (rule 2.2). Rule 2.3 and clause 5.1 of Annex 1 give an extended policy period, and rule 2.4 requires a firm to cease practice promptly unless it obtains cover within the cessation period.

Does the SRA say anything about AI and PII?

Very little: I found no mention of insurance in the SRA's warning notice on the misuse of AI, published on 17 August 2026. The SRA's November 2023 Risk Outlook report on AI said the insurance market's approach to covering legal AI was still developing, and that firms will need to engage closely with their insurers. I found nothing newer from the SRA, and I found no SRA statement that the minimum terms treat AI-assisted work differently from other work.

The Law Society's generative AI essentials, updated in September 2025, tell firms to speak to their insurer about whether a tool is covered under the existing policy, and its checklist includes establishing the liability and insurance coverage related to generative AI use. I found no view in it on how an insurer will decide. Our guide to what the SRA expects of firms that use AI covers the wider rules.

What about cyber incidents?

Insurers may exclude certain cyber events, but the exclusion cannot remove cover for civil liability under clause 1.1 or for defence costs. The cyber exclusion appears as item 17 under the Annex 1 exclusions on the SRA's web page; I infer from a cross-reference that it is clause 6.12, so confirm the number. It allows exclusion of a cyber-act, computer system failure, malware, core infrastructure failure and a breach of Data Protection Law, provided the exclusion does not limit the insurer's liability to indemnify civil liability under clause 1.1 (including the obligation to remedy a breach of the SRA Accounts Rules) or defence costs. I did not read the end of the defence-costs limb, so read the clause itself.

The SRA's 2021 consultation on cyber cover said the policy is not intended to provide cover for first-party losses suffered by the law firm. Its December 2021 Q&A says separate cyber cover can address those losses but is not mandated.

In my reading, that matters for an AI tool that handles client data. A data incident could produce a claim from a client, which the minimum terms are built to cover. It could also produce costs for the firm itself, which the SRA says the minimum terms do not cover. Our article on data security for law firms using AI covers the data protection side.

Where do claims come from in conveyancing?

The most recent SRA claims analysis I found covers 2004 to 2014, so it is historic. The SRA's claims data attributed 26% of claims to residential conveyancing, where the insurer gave a reason for the claim, with commercial conveyancing and conveyancing of unspecified type shown separately. The chart does not state whether its shares are by claim count or by value, it covers all areas of law, and I found no current data on what causes conveyancing claims.

My inference is that it shows where a firm's checks should be most careful. Our guide to lender instructions and the Mortgage Lenders' Handbook covers one area that has historically produced claims.

What do brokers say about AI and insurers?

Brokers report that underwriters are asking about AI but have seen no significant AI-related claims yet. Brokers are commentators, so their reports carry less weight than regulator data, and I have not independently checked the Howden items below. Howden's April 2026 renewal review, published on 7 May 2026, said underwriters were adding AI questions to proposal forms and reported no significant AI-related claims to date. Its July 2026 market report pointed to continued focus on cyber and AI governance. I read both as a sign that insurers want to know whether a firm uses AI and how it supervises it. I found no insurer that says it charges more or less for it.

Can AI reduce PII risk, then?

In my view it can, in the narrow sense that a tool that flags a missing search or an unreported discrepancy catches things a tired fee earner misses. I found no study measuring it. The risk runs the other way if the output is trusted without checking, because the firm remains responsible and the SRA's warning notice says solicitors remain accountable for the AI they use.

The SRA's 2023 PII market study found that premiums typically ran at 3 to 9% of annual turnover, with a median of 5%, and that property work typically attracted premiums equivalent to 8 to 12% of turnover. A firm that hopes to cut its premium with software should know that I found no evidence insurers price on that basis today.

What should a firm do?

These five steps are my own suggestions, drawn from the sources above; no rule states them in these words.

1. Tell your broker and insurer what AI tools you use and for what, and answer the proposal form questions about them accurately.
2. Ask in writing whether the policy treats AI-assisted work differently, and keep the reply.
3. Record on each file who reviewed an AI output and what they checked.
4. Ask whether the firm has, or needs, separate cover for its own losses from a cyber incident, which the SRA does not mandate.
5. Start the renewal process early enough that rule 2.2 is never in doubt.

About the author

Appan Pathmanathan is a solicitor and Chief Operating Officer of Lex Sentinel, which builds AI tools for UK conveyancers. He has worked in UK legal practice since 2001, including litigation involving money laundering and fraud, and conveyancing, and has been managing partner of a law firm. He delivers anti-money laundering and compliance training. Connect on LinkedIn.

Sources

Checked on 25 October 2026.

1. SRA, Indemnity Insurance Rules (including the minimum terms and conditions at Annex 1)
2. SRA, Misuse of AI warning notice (17 August 2026)
3. SRA, Risk Outlook report on AI in the legal market (20 November 2023)
4. Law Society, Generative AI: the essentials (updated September 2025)
5. SRA, Professional indemnity insurance market for law firms (14 September 2023)
6. SRA, Indemnity insurance claims data 2004 to 2014
7. SRA, Consultation on PII and cyber cover (2021)
8. Howden, April 2026 renewal review (7 May 2026) and July 2026 market report (broker commentary, not independently checked)

Frequently Asked Questions

What professional indemnity cover must a conveyancing firm hold?

Qualifying insurance on the SRA's minimum terms and conditions, with a limit of at least £3 million for any one claim for relevant recognised or licensed bodies and £2 million in all other cases.

Does using AI change a firm's PII cover?

I found no SRA or insurer statement saying it does. The SRA's 2023 Risk Outlook said the insurance market's approach was still developing, so ask your insurer in writing.

Do the minimum terms cover a cyber attack?

Insurers may exclude certain cyber events, but the exclusion cannot remove cover for civil liability under clause 1.1 or for defence costs. The SRA says the minimum terms are not intended to cover the firm's own losses.

Will AI lower my firm's premium?

I found no evidence that insurers price on that basis. Brokers report that underwriters are asking about AI governance.

What should I tell my insurer about AI tools?

Answer the proposal form accurately, and tell your broker what tools you use, what they process and who reviews their output.