2027 PII Changes for Malaysian Law Firms
The Bar Council has announced the 2027 PII changes for Malaysian law firms under Circular No. 354/2026 dated 25 September 2026, including a standardised RM500,000 mandatory limit for firms of 1 – 5 lawyers.
Key Changes for 2027
- Change of insurer: Berjaya Sompo Insurance Berhad is the insurer for the Malaysian Bar’s 2027 mandatory PII Scheme, replacing Pacific & Orient Insurance Co Berhad.
- Firms with 1 – 5 lawyers: Mandatory limit standardised at RM500,000
- Firms with 6 – 35 lawyers: Mandatory limit increases by RM50,000 for each additional lawyer, up to RM2 million.
- Firms with 36 lawyers and above: Mandatory limit remains capped at RM2,000,000, with a reduced base excess for 2027
- Base premium: RM1,150 (excluding tax) per advocate and solicitor
New Client Account Risk Management Requirements
The 2027 PII Scheme introduces Clause 11(e) as a risk-management measure relating to clients’ accounts and misconduct exposure.
Law firms should take note of the following requirements:
- For firms with more than one partner: transactions involving the operation of clients’ accounts must have two signatories, both of whom must be partners. One signatory is sufficient to stop the operation of an account or cancel a transaction.
- Where electronic banking is used for clients’ accounts, multi-factor authentication (MFA) must be in place for authorising access.
- Segregation of duties is required so that system access for setting up payees or payments is separate from access for approving or releasing payments.
- Firms must comply with the Solicitors’ Account Rules 1990 and Accountant’s Report Rules 1990, as amended from time to time.
Clause 11(e) requires the relevant risk-management procedures to have been complied with at the time of the misconduct. Non-compliance may therefore affect the availability of cover for a misconduct claim under the 2027 Scheme. Firms should refer to the applicable policy wording and Certificate of Insurance for the full terms and conditions.
Misconduct Coverage Sublimit
Under the 2027 Scheme, misconduct coverage for any one claim and in the aggregate is:
- 1 lawyer – RM250,000
- 2 lawyers – RM300,000
- 3 or more lawyers – RM350,000
Firms should therefore consider not only their overall PII limit but also the applicable sublimits and policy terms when reviewing their insurance arrangements.
Why This Matters
Many law firms still need higher total limits to meet bank panel requirements or the value of work they handle. For some firms, the higher mandatory limit may reduce the amount of additional Top-Up or Excess Layer coverage required to reach a target overall PII limit.
Example from the Bar Council circular: A one-lawyer firm that previously paid approximately RM600 to reach RM750,000 total cover would now pay approximately RM350.
What Should Law Firms Review for 2027
Firms should review whether their total PII limit remains appropriate for bank panel appointments, client requirements, contractual obligations and the nature and value of matters handled by the firm.
A firm may also encounter an ad hoc bank panel application or specific banking or financing transaction during the year where the bank requires a higher PII limit than the firm currently maintains. In such cases, the firm may consider arranging additional PII or an excess layer, subject to underwriting acceptance and the applicable policy terms.
Where additional coverage is required above the mandatory scheme, PII Top-Up or Excess Layer coverage may be considered based on the total limit required, subject to underwriting acceptance and applicable policy terms.
Reviewing Your Firm’s 2027 PII Requirements?
If your firm requires a higher overall PII limit for a bank panel appointment, ad hoc banking matter, client requirement or contractual obligation, VL Capital can assist in coordinating non-binding Top-Up / Excess Layer underwriting terms.
For an initial review, the firm may provide its latest PII proposal form or summary report, current PII Certificate of Insurance and the total PII limit or additional amount of cover required.