From 23 February, the Insurance Distribution Directive will set new minimum levels of professional indemnity insurance for firms involved in the distribution of insurance products.
This affects all firms advising on, arranging or managing non-investment insurance contracts (pure protection contracts and life policies such as long-term insurance contracts and annuities), insurance-based investment products and general insurance.
The new limits
- Per claim: The required minimum limit of indemnity on a firm’s PII cover for a single claim per year will be increased to €1,250,000 (currently €1,120,000).
- In aggregate: The required minimum limit of indemnity on a firm’s PII cover in the aggregate per year will be increased to €1,850,000 (currently €1,680,300).
PII cover will need to meet the new requirements from 23 February irrespective of policy renewal date. So when renewing or taking out your policy, you should discuss this with your broker or insurer so that appropriate levels of cover are maintained throughout the term.
The FCA has the ability to monitor compliance with the new requirement using data collected via Gabriel. It set out its near-final rules to implement the IDD PII requirements in PS17/21 (Chapter 7). It is expected the PII rules will become final as they are EU Regulation rather than an EU Directive.
Russell Facer is managing director of Threesixty