2025 has been a transformative year for accountants. With rapid technological advancements, evolving regulations, and shifting client expectations, the profession has faced both exciting opportunities and new challenges. While accountants continue to play a vital role in business success, these changes have also increased the risk of professional indemnity (PI) claims. Understanding the most common claims, why they happen, and how to avoid them is essential to protecting your practice and reputation.
Understanding professional indemnity insurance (PII) in 2025
Professional indemnity insurance (PII) remains a cornerstone of risk management for accountants. It protects professionals against claims arising from alleged negligence, errors, or omissions in the course of their work. In 2025, with the increasing complexity of accounting services and regulatory demands, having the right PII cover is more important than ever.
The landscape for accountants in 2025: Regulation and audit reform
This year, the regulatory environment has continued to evolve rapidly. Audit reform is progressing, with regulators focusing on improving audit quality and accountability. The Financial Reporting Council (FRC) has intensified investigations, issuing fines, penalties, and disqualifications more swiftly. Notably, the FRC is proposing an accelerated procedure to resolve cases faster, reflecting the urgency to uphold professional standards. Increased scrutiny on audit quality in 2026 could potentially lead to more claims against firms that fail to meet heightened expectations.
The top 5 most common PI claims for accountants in 2025
1. Errors in financial reporting and statements
Financial reporting errors remain the leading cause of PI claims. These often arise from misapplication of accounting standards, overlooked regulatory updates, or failure to detect material misstatements.
Why it happens:
- Complex and evolving accounting standards.
- Pressure to deliver timely reports.
- Over-reliance on technology without adequate manual checks.
How to avoid it:
- Keep engagement letters up to date, clearly defining the scope of work and responsibilities.
- Implement robust quality control processes, including peer reviews and checklists.
- Diarise and prioritise deadlines to ensure timely completion and review.
2. Tax advice and compliance failures
Tax-related claims have surged, driven by the complexity of new regulations and schemes such as R&D tax credits, cross-border tax issues, and trusts. High-profile cases involving public figures have brought attention to the risks of incorrect advice in these areas.
Why it happens:
- Rapidly changing tax laws and relief schemes.
- Complex cross-border transactions.
- Misunderstanding or misapplication of trust tax rules.
How to avoid it:
- Stay informed on tax developments and seek specialist advice when needed.
- Use detailed engagement letters to clarify the scope of tax advice.
- Maintain meticulous records and diarise all tax deadlines.
3. Breach of confidentiality and data security
With the rise of digital accounting platforms, breaches of confidentiality and data security incidents have become more common. Cyber threats, including ransomware and targeted phishing attacks (spear-phishing), pose significant risks.
Why it happens:
- Increasing cyberattacks targeting financial data.
- Inadequate cybersecurity measures or staff training.
- Over-reliance on AI tools without proper oversight.
How to avoid it:
- Invest in strong cybersecurity infrastructure, including encryption and multi-factor authentication.
- Train staff regularly on data protection and cyber hygiene.
- Be cautious of “AI washing” – overestimating AI capabilities without sufficient human oversight, which can lead to errors and even criminal liabilities.
4. Failure to detect fraud or irregularities
Accountants are expected to identify fraud or irregularities during audits or reviews. Failure to do so can lead to costly claims, especially as regulators increase scrutiny.
Why it happens:
- Insufficient audit procedures or professional scepticism.
- Complex fraud schemes that are difficult to detect.
- Pressure to reduce audit time and costs.
How to avoid it:
- Follow rigorous audit standards and maintain professional scepticism.
- Use data analytics and forensic tools to identify anomalies.
- Document all findings and audit steps thoroughly.
5. Inadequate advice on business structures and transactions
Advising on business structures, mergers, acquisitions, and transactions carries significant risk. The increasing trend of accounting firms merging brings additional challenges, including potential directors and officers (D&O) liabilities for retiring directors and conflicts between audit and consulting arms.
Why it happens:
- Complex transaction structures and volatile markets, especially in AI and tech sectors.
- Conflicts of interest, particularly in private equity deals.
- Inadequate due diligence or failure to identify warranty and indemnity (W&I) risks.
How to avoid it:
- Ensure clear separation of audit and consulting services to manage conflicts.
- Conduct thorough due diligence and risk assessments.
- Use detailed engagement letters and communicate risks clearly to clients.
Emerging risks to watch in 2026
- Regulatory developments. Expect further tightening of audit standards and tax compliance, with faster enforcement actions.
- AI and technology. AI-driven errors and inadequate oversight remain a concern. Companies in the AI sector are highly volatile, complicating valuations and increasing transaction risks.
- Insolvency. Current high insolvency rates mean accountants face greater scrutiny, especially around restructuring advice.
- Cybersecurity. Cyber threats continue to evolve, requiring ongoing investment in security and staff training.
Risk management tips for accountants
Effective risk management is key to avoiding PI claims. Here are some practical tips:
- Keep engagement letters up to date. Clearly define the scope, limitations, and responsibilities in writing.
- Diarise and prioritise deadlines. Use reliable systems to track all client deadlines and regulatory filings.
- Maintain continuous professional development. Stay informed about regulatory changes, tax updates, and emerging risks.
- Implement quality controls. Use checklists, peer reviews, and audit trails to ensure accuracy.
- Invest in cybersecurity. Protect client data with robust IT security and regular staff training.
- Manage conflicts of interest. Maintain clear policies and separate audit and advisory functions where necessary.
Marsh Commercial: Appointed PI broker for ICAEW members
At Marsh Commercial, we understand the unique challenges accountants face in today’s fast-changing environment. As the appointed professional indemnity broker for ICAEW members, we offer a dedicated PI scheme built specifically for ICAEW professionals. Our expert team works closely with you to tailor coverage that fits your practice’s needs, helping you manage risk confidently and protect your professional reputation.
To learn more about our ICAEW PI scheme and how we can support your practice in 2026 and beyond, contact us today.
How we can help
To learn more about our ICAEW PI scheme and how we can support your practice in 2026 and beyond, contact us today.
