BIBA members are reminded that the limits for the professional liability insurance (PI) that they are required to hold will be increasing from 12 June 2020.
Article 10(7) of the Insurance Distribution Directive requires the European Insurance and Occupational Pensions Authority (EIOPA) to review the base amounts for professional indemnity insurance and financial capacity of insurance and reinsurance intermediaries every five years to take into account the changes to the European index of consumer prices as published by Eurostat. This increased by 4.03% over the period 1 January 2013 through to 31 December 2017, which means that the base amount in euro is required to be adjusted upwards by the percentage change in that index.
Insurance and reinsurance intermediaries will consequently be required to have professional indemnity insurance covering the whole territory of the Union or some other comparable guarantee against liability arising from professional negligence, for at least EUR 1,300,380 applying to each claim and in aggregate EUR 1,924,560 per year for all claims, unless such insurance or comparable guarantee is already provided by an insurance undertaking, reinsurance undertaking or other undertaking on whose behalf the insurance or reinsurance intermediary is acting or for which the insurance or reinsurance intermediary is empowered to act or such undertaking has taken on full responsibility for the intermediary’s actions.
Members may access the full text of the Regulation by clicking here.
As it is a regulation, the FCA does not need to amend MIPRU to be effective, but the FCA will likely want to adjust MIPRU 3.2.7 R for the sake of good order.
As members will be aware, MIPRU 3.2.7 R does modify the aggregate to make it the higher of the monetary amount or an amount equivalent to 10% of annual income subject to a maximum of £30 million.
BIBA members’ compliance and regulation queries should be directed to: [email protected].